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NDPC boss: Impact of E-Levy on digitalisation will be minimal

Some economists have warned that the introduction of the E-Levy in the 2022 Budget will defeat government’s digitalisation drive and plans to roll out the digital currency – E-cedi.

Kodjo Esseim Mensah-Abrampa, director general of the National Development Planning Commission (NDPC), has backed governments decision to introduce the E-Levy adding that it will help rake in more  revenue.

Some economists have warned that the introduction of the E-Levy in the 2022 Budget will defeat government’s digitalisation drive and plans to roll out the digital currency – E-cedi.

However speaking to Kofi Abotsi on Townhall Talk on Asaase Radio, on Friday (3 December), the NDPC boss said the impact of the  E-Levy on digitalisation will be minimal and brief.

“So we have look at it in terms of if you come up with any policy will it affect another policy negatively, neutrally or positively, yes , it might affect digitalisation but that  is for a very brief moment.”

“Yes we understand the payment of E-cost is not inelastic, so immediately you bring it there will be a reaction but the cost of cash payment we have looked at that , so the cost of cash payment is vey heavy such that a rationale individual will look at the value of the electronic transfer of cash and then come back.”

” So we do not expect that once you bring it people will accept , yes there will be a reaction but we know in the analysis that it will be a brief moment and people will come back to it because the cost of maintaining cash payment is very very high in our situation and is one of the ways that we can bring it.” the NDPC boss said.

Dr Mensah-Abrampa says studies show countries which initially resisted such levies have now embraced the policy.

Mobile money charges to go up 1 February

The government has decided to place a levy on all electronic transactions to widen the tax net and rope in the informal sector, the Finance Minister, Ken Ofori-Atta, has said.

Presenting the 2022 Budget Statement and Economic Policy in Parliament on Wednesday (17 November), 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.

“Mr Speaker, 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 aged 15 years and more had a mobile money account in Ghana.

The share of mobile money users increased over the previous three years but decreased slightly in 2021 from 39% in 2020.

Share of population with a mobile money account in Ghana (2018 to 2021)

 

Fred Dzakpata

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