The policy think tank Danquah Institute has dismissed reports suggesting it has called for the suspension of the proposed electronic transactions tax pending broader consultation. A statement issued by the institute on Friday (26 November) describes the policy as appropriate, right, timely and innovative.
“It has come to the notice of the Danquah Institute that some media houses have chosen to misreport the discussions made on the E-Levy in our press briefing held on Wednesday 24 November 2021.
“We wish for it to be known that Danquah Institute has not asked government to suspend the e-tax for broader consultations as has been reported,” the statement says.
“The Institute firmly holds the position that the E-Levy is appropriate, right, timely and is an innovative tax. The Danquah Institute wishes to reiterate its position on the introduction of the levy on all electronic transactions to widen the tax net and to rope in the informal sector, as a truly commendable initiative,” the statement says.
“Most innovative tax in the Budget”
“It has come to the notice of the Danquah Institute that some media houses have chosen to misreport the discussions made on the E-Levy in our press briefing held on Wednesday 24 November 2021. We wish for it to be known that Danquah Institute has not asked the government to suspend the e-tax for broader consultations as has been reported.
“The Institute firmly holds the position that the E-Levy is appropriate, right, timely and is an innovative tax. The Danquah Institute wishes to reiterate its position on the introduction of the levy on all electronic transactions to widen the tax net and to rope in the informal sector, as a truly commendable initiative.
“In our brief we pointed out how research indicates that phenomenal growth and resilience occurred in the communications sector even in the midst of the COVID-19 pandemic. We also indicated that, from projections made, the government will be able to raise revenue from the initiative.
“The government is looking to make GHC6.9 billion from the Electronic Transactions Levy (E-Levy) in 2022 alone. Comparing this figure with what the government is projected to get as import duty on all imports projected to come into the country in 2022 (ie, GHC9 billion as duties levied on all imports that will come into the country), the E-Levy is a powerful means for the government to raise revenue. The levy therefore provides a broad-based platform for government to raise needed revenue.
“It will not go to enrich the service provider, but will be going into government coffers to support entrepreneurship, pay for our roads and other developmental projects and all that it has been earmarked to do.
“For the avoidance of doubt, the Danquah Institute stated that the E-Levy is a powerful tax revenue-raising handle, and the government should be able to implement it for that purpose. DI also commended the government for making the E-Levy pro-poor.”
E-Levy a good move
As Asaase News reported on 24 November, Dr Antoinette Tsiboe-Darko, the executive director of the Danquah Institute, commended the government for introducing the E-Levy, arguing that it will help plug revenue loopholes.
On Budget Day (Wednesday 17 November), the Minister for Finance, Ken Ofori-Atta, announced the E-Levy, a 1.75% tax on mobile money and other electronic financial transactions, as a measure to “rope the informal sector into the tax net”.
Speaking at a media briefing on Wednesday, Tsiboe-Darko said the E-Levy is strategic for revenue mobilisation.
“The introduction of a levy on all electronic transactions to widen the tax net and rope in the informal sector is a commendable initiative. The phenomenal growth and resilience that occurred in this sector … we looked at communication alone [and] we said 21%, even in the COVID-19 pandemic, is worth noting,” she said.
Healthy projections
By the projections made, the government expects to make GHC6.9 billion from the electronic transactions levy in 2022 alone. In contrast, it is projected that the government will get GHC9 billion in total from all imports coming into Ghana.
“We can see that the E-Levy is a powerful way for the government to raise revenue,” Tsiboe-Darko said.
The DI director added: “The levy … provides a broad-based platform for the government to increase [the] revenue [it needs]. In essence, the E-Levy is a transactional tax, but it is an extra commission that is being charged and this time it won’t be going to enrich the service provider: it will go into the government’s coffers to support the drive for entrepreneurship, to pay for our roads and other huge development projects.”
However, the institute called for the classification of prospective taxpayers into four groups, backed by research and stakeholder engagement.
Mobile money charges go up 1 February
Presenting the 2022 Budget Statement in Parliament on Wednesday, the Finance Minister said the government has decided to place a levy on all electronic transactions to widen the tax net and rope in the informal sector.
Ken Ofori-Atta said the new charge will be known as the “Electronic Transaction Levy, or E-Levy”.
“Electronic transactions covering mobile money payments, bank transfers, merchant payments and inward remittances will be charged at an applicable rate of 1.75%,” Ofori-Atta said, “which shall be borne by the sender except for inward remittances, which will be borne by the recipient.
“This new policy comes into effect from 1 February 2022. The government will work with all industry partners to ensure that their systems and payment platforms are configured to implement the policy.”
As of January 2021, 38.9% of the population in Ghana aged 15 and above had a mobile money account.
The population share of mobile money users increased over the previous three years but decreased slightly in 2021 from 39% in 2020.
Fred Dzakpata
Asaase Radio 99.5 – tune in or log on to broadcasts online
Follow us on Twitter: @asaaseradio995
#AsaaseRadio
#TheVoiceofOurLand
