Three National Democratic Congress (NDC) MPs have filed a lawsuit before the Supreme Court after Parliament passed the Electronic Transactions Levy (E-Levy) Bill despite the walkout from Parliament on Wednesday by the Minority.
The government argues that the new tax on electronic transactions and transfers will raise money for the pandemic-hit Ghanaian economy. But critics say the tax will discourage trade and add to the economic burden on ordinary members of the public.
The NDC has called the E-Levy of 1.5% “regressive” and unlawful because, it argues, there was no quorum in Parliament when it was passed. Opposition lawmakers walked out of the proceedings in protest.
One of the plaintiffs – the NDC MP for Bawku Central, Mahama Ayariga – said he is hopeful the Supreme Court will declare the tax unlawful.
“The Speaker and the Majority side knew they didn’t have the numbers; they hadn’t met the quorum and yet they proceeded and purported to have voted to pass the E-Levy …
“And if there wasn’t a quorum, there couldn’t have been a decision, and so there could also not have been an E-Levy passed. So, the president has nothing before him to sign into law,” Ayariga said.
In his State of the Nation Address on Wednesday (30 March 2022), President Akufo-Addo said the new tax will boost the economy as it recovers from the COVID-19 pandemic.
“Despite the protracted and sometimes acrimonious nature of proceedings, I am happy that the House has, finally, found it possible to pass the E-Levy,” Akufo-Addo said.
“I believe the levy is going to make a significant contribution to revenue mobilisation and the management of the economy, and I want to thank members of the House for making this possible.”
Officials say they estimate that the levy will raise roughly US$900 million by the end of the year. But many ordinary Ghanaians are opposed to the new tax, which will affect anyone using mobile money services.
Sophia Anane, an Accra-based second-hand clothing trader, says it will harm her business.
“What are they using the revenue we generate from cocoa and oil for? The government wants to tax them on what little money they’re making in addition to what the telecommunications companies also deduct as commission. What is our fate?” she asks.
Some economists argue that the government is wrong to burden Ghanaians with new taxes while they are still recovering from pandemic restrictions and disruptions.
The director of research at the Institute of Economic Affairs (IEA), John Kwakye, said the government should focus instead on improving tax collection.
“There are several loopholes in our tax system that, if they were plugged, we’ll be able to raise our tax-to- GDP ratio to something like 20%. We’re now doing just about 12%. So, to me, if these other measures were being taken, I don’t think that … the E-Levy will be necessary,” he said.
Ghana’s Supreme Court is expected to hold a hearing on the opposition’s challenge to the new tax in the coming weeks.
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