The Ministry of Finance has emphasized that the proposed levy on electronic transactions is a necessary tool to raise the country’s tax-to-GDP ratio which remains lower than most of Ghana’s peers.
According to the Ministry of Finance, the E-Levy would contribute towards moving the country’s debt to a more sustainable debt level and also ensures that the country has the revenues to sustainably invest in entrepreneurship, youth employment, cyber security, digital and road infrastructure.
“The E- Levy is a necessary tool to increase our Tax to GDP from circa 13% to 16% and above guarantee that we all pay. The E-Levy would not only ensure that we move towards a more sustainable debt level but would also ensure that we have the revenues to sustainably invest in entrepreneurship, youth employment, cyber security, digital and road infrastructure. The E-Levy also provides a means for all Ghanaians to help support their country and grow this economy as compliant citizens giving to Caesar what belongs to Caesar”.
Ken Ofori-Atta
Minister for Finance, Ken Ofori-Atta, stated in his first Press Conference of 2022 on ‘why the E-Levy’, that undeniably, digitalization is eroding the traditional resilience of brick and mortar enterprises. According to him, with fewer transactions happening across the counter, there is an increased risk that some of the standard revenue generation and tax measures will gradually become obsolete.
Mr. Ofori-Atta disclosed that except for Excise duties, the various tax types experienced a marked decline in growth between 2019-2020.
“Domestic VAT, for instance, which has traditionally been a significant component of Ghana’s tax framework, increased by 3% between 2019-2020, compared to 29% between 2018-2019. Indeed, it is clear that Government must adopt a revenue mobilization approach befitting the evolving digital age. Thus, the E-Levy was borne out of a careful study of current trends in this rapidly evolving digital age and is specific on the transactions on which it will be applied”.
Ken Ofori-Atta
Stakeholder engagements
Mr. Ofori-Atta intimated that following the presentation of the budget on November 17, 2021 and the discussions that followed, his outfit has had extensive stakeholder engagements including Parliament, representatives of FBOs, the Banks and Chamber of Telecommunications, and Civil Society Organizations. On a personal basis, the Finance Minister said: “I have had smaller intimate conversations with citizens across a few constituencies in Ghana”.
True to the spirit of burden sharing, the Telcos have agreed to reduce their charges by 0.25% to reduce the overall net impact of the levy on subscribers, the Finance Minister stated.
“We want to take this opportunity to thank our friends in the Telecom Industry and we believe that by this measure, we can raise the requisite resources to bolster our fiscal position while keeping an eye on transaction costs and consumer welfare and reducing the impact on the average Ghanaian and keeping the resources required for our growth agenda”.
Ken Ofori-Atta
Mr. Ofori-Atta highlighted that after extensive consultations, the E-levy will be re-submitted to Parliament this month. He is optimistic the Members of Parliament will “approve the E-Levy on a consensus basis so we can collectively address the big issue of unemployment”.
Scope of the E-levy
The Finance Minister also took the opportunity to clarify that the E-Levy will cover: Mobile Money Transfers between accounts on the same electronic money issuer (EMI); Mobile Money transfers from an account on one EMI to a recipient on another EMI; Transfers from bank accounts to mobile money accounts; Transfer from mobile money accounts to bank accounts; and Bank transfers on a digital platform or application which originate from a bank account belonging to an individual to another individual.
However, Mr. Ofori-Atta emphasized that the E-Levy will not impact: Cumulative transfers of GHS 100 per day made by the same person; Transfers between accounts owned by the same person; Transfers for the payment of taxes, fees, and charges on the Ghana.gov platform; Electronic Clearing of Cheques; Specified merchant payments (i.e. payments to commercial establishments registered with GRA for Income Tax and VAT purposes); and Transfers between principal, master-agent, and agent’s accounts.
He however, warned that “if there is realization that certain migrations to avoid paying, we shall invoke appropriate administrative measures”.
The Minister disclosed that from today, January 20, 2022, a team comprising himself, colleague Ministers and other key members of Government will embark on a public engagement and sensitization campaign across the country.
“We intend to communicate clearly on the proposed mechanics of the E-levy, its potential benefits to the people of Ghana within the spirit of burden sharing that must guide us in our development efforts as we move Ghana Beyond Aid”.
Ken Ofori-Atta
The minister indicated that government’s fiscal consolidation efforts will not only be revenue-led but efforts are being made to cut down expenditure. He indicated that in addition to the E-Levy, the government is committed to the implementation of other revenue measures including exemptions bill and property taxes, and internally generated funds to mobilize resources for development. He, therefore, urged Ghanaians to “keep our 1.75% to build our country”.
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