Former Finance Minister, Seth Terkper says the introduction of the E-Levy will not contribute significantly to addressing the revenue shortfall in the country hence the need for better policies and strategies from the government.
The government has projected a deficit of GHC37 billion for 2022, as revenue is targeted at GHC100.5 billion against the expected expenditure of GHC135.6 billion.
Meanwhile, the E-Levy is expected to rake in only GHC6 billion.
Terkper, in an interview with the B&FT, said considering the deficit gap and how much the E-Levy is expected to bring in, introducing the tax would just be a distortion. Therefore, the broader issue should focus on how the huge deficit gap can be closed.
“The issue should be how we are going to finance the deficit. The GH¢6billion from the E-levy is a drop in the ocean because we are looking at financing GHC37 billion. So, inasmuch as the E-Levy debate is on, the government should answer the bigger question about how – without going to the market – it will finance the last quarter.
“The E-Levy is not going to significantly reduce the deficit; it is only going to cause distortion. It is going to cause a burden to businesses and consumers in terms of increment in prices and inflation,” he said.
He further expressed concern about the back and forth between the minority and majority groups in Parliament regarding the budget approval; saying the situation may escalate into a government shut-down if both sides of the House do not come to a quick conclusion in the matter.
“The time to pass the 2022 Budget – December 31, 2021 – is approaching fast and could make a government shutdown a reality; and Cabinet and Parliament must work expeditiously on a strategy or plan of action for revenue, expenditure, borrowing/loan and real sector initiatives.
“A stalemate in Parliament on economic policy continues, the clock is ticking on detailed consideration of the estimates and policies of sector ministries – and poses major fiscal risks of non-passage of budget and closure of government for lack of authority to disburse Consolidated Fund inflows,” he said.
The E-Levy debate
Previously, the minority in Parliament held the position that the E-levy would take the country backward by affecting small businesses and individuals, especially the poor.
This led to some controversies in the House, leading to the rejection of the budget on Friday, 26 November 2021, after the majority in Parliament walked out. But on Tuesday, 30 November, the decision was revoked by the majority in Parliament after the minority also walked out.
However, the Minority Leader, Haruna Iddrisu, has departed from his side’s original stance to reject the introduction of the Electronic Levy (E-Levy) in its entirety – saying they will agree if it is slashed to 1 per cent with a threshold of GHC300.
The Minority Leader said this was arrived at after extensively engaging Finance Minister Ken Ofori-Atta on the matter.
He said this at the launch of the 10th-anniversary celebration of the Ghana Chamber of Telecommunications.
“A week ago, it was no, no, no [that] we won’t accept E-Levy. But having listened to officials in government, including the minister for finance, I was convinced to accept a departure from my original ‘no’ to accept a 1% E-levy for the good of the Ghanaian people.
“If the government is able to make overtures and reach out and say- we want to peg the electronic levy at 1%, I don’t have any difficulty convincing my constituencies. This should be our contribution to fiscal consolidation and our contribution to ensuring that the economy doesn’t collapse on any of us going into the future,” he said.
Asaase Radio 99.5 – tune in or log on to broadcasts online
Follow us on Twitter: @asaaseradio995
#AsaaseRadio
#TheVoiceofOurLand
