A Public Policy, International Relations & Migration Specialist, Dr. Kasim Salifu, has kicked against government’s plan to contract the services of a third party service provider to monitor, track and validate receipts of the proposed levy on electronic transactions (E-levy).
According to him, the Ghana Revenue Authority (GRA) has what it takes to collect the levy since it is not different from any of the existing taxes that the GRA is currently collecting for the government.
“You want to seek the services of a third party to monitor what? To me, in the first place, even if we should implement e-levy today, there is no need to contract the services of a third party to validate or monitor receipts of the E-levy.
“GRA is well structured and they can do all those collections. GRA has all the necessary logistics and human resource to collect this E-levy in case we are even going to agree for this E-levy to come in. This is very simple to collect, that’s why I said it’s a lazy way of getting revenues. The system is already set up, you just put in the necessary measures that’s all.
“If it is technical know-how, GRA can collaborate with the National Communication Authority, government agencies, to team up with the resources and the necessary training to collect this tax”.Dr. Kasim Salifu
Dr. Salifu then suggested that part of the amount earmarked as e-Transaction Levy Services should rather be given to the GRA to acquire any gadgets that maybe needed to monitor and collect the levy. The Lecturer at the Simon Diedong Dombo University of Business and Integrated Development Studies emphasized that “if we are going for E-levy, we should rather allow the existing institutions to collect the tax”.
E-Transaction Levy Services
In Appendix 4B of page 242 of the 2022 Budget Statement, government earmarked an amount of GH¢241,933,000 as e-Transaction Levy Services. This expenditure item, amid the ensuing debate on the proposed 1.75% E-levy, sparked public outcry especially from the Minority in Parliament.
In response, Deputy Finance Minister, John Kumah, explained that the allocation will do a number of things including payment for the services of a third party service provider who will help in monitoring, tracking and validation of all receipts that will come from the e-levy.
The GRA, according to Dr. Kumah, will also be supported from this pool since it will be provided with logistics which will help in the collection of the levy. Hon. Samuel Okudzeto Ablakwa, MP for the North Tongu, however, suggested that instead of a nominal amount, the cost of collecting the E-levy should rather be a percentage of the amount that will be collected.
Hon Ken Ofor-Atta, Minister of Finance, disclosed that a portion of the proceeds from the E-Levy will be used to support entrepreneurship, youth employment, cyber security, digital and road infrastructure, among others. Yet, the proposed cost of collecting the e-levy is 3.5% of the projected proceeds in 2022. Per the government’s projections, the E-levy is expected to generate GH¢6,963,386,254 in 2022 and GH¢7,888,562,147 in 2023.
The Deputy Finance Minister, argued that “the services of the third party are required if Ghana is to optimize receipts of the E-levy”. On the contrary, Dr. Salifu told The Vaultz News that “this GHS 241 million is a way of awarding party faithful because in the budget, as at now, we don’t know who is going for this contract”.
No Need to for E-Levy
Dr. Salifu contended that there is no need to impose an E-levy at this time because of the economic hardships that Ghanaians are enduring. Just like earlier concerns raised by other experts, the Policy Analyst also indicated that introduction of the E-levy will discourage the use of MoMo which is currently gaining traction across the country. He also believes the levy will defeat government’s financial inclusion agenda as people will revert to the old ways of transacting instead of through electronic platforms.
Speaking about the rationale for the introduction of the E-levy, Dr. Kasim iterated government’s objective which is to widen the tax net. But to him, “we are not widening it; we are just lazing around”. The doggedness of the government to introduce the levy despite public outcry suggests to Dr. Kasim that government is “saying that all this while, the tax they are collecting; they are not using it for anything. So, if they don’t get E-levy, they cannot survive”.
Though the Policy Analyst advised the government not to introduce the tax because “it’s a lazy way of getting tax revenues” and will discourage the use of MoMo, he indicated that even if government wants to go ahead to introduce the levy, it should be done at a rate of 0.05 percent. This is because “I think 1.75% is on the high side”. He therefore, urged the government to put in place a robust system that will be efficient and fair to enable the full potential of the tax to be harnessed.
Dr. Kasim Salifu however, advised that the introduction of the e-levy should be a gradual process which should not be rushed. According to him, “we shouldn’t even introduce the e-levy looking at the current situation that we find ourselves”. Instead, he urged the government to rather seal its revenue leakages, empower the GRA to be in the position to collect more taxes, reduce its tax exemptions and cut down “unnecessary” expenditures.