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Tesah Capital: Government’s projected increase in revenue bold, necessary for debt sustainability

Tesah Capital has also indicated that the proposed E-Levy in the 2022 Budget Statement and Economic Policy offers the government an opportunity to increase domestic revenue

Tesah Capital – an asset management company in the country says the government’s projected increase in revenue of 42.9% is bold and necessary for debt sustainability.

In its analysis of the 2022 Budget, Tesah said, “It is understandable why the E-Levy will be unpopular among Ghanaians. The tax on electronic transactions has the potential of negatively impacting the government digitalisation agenda.

“In its current form, it will affect low-income households disproportionately. However, the E-Levy offers the government an opportunity to increase domestic revenue which is key in achieving its sustainable development goal.”

The firm in its analysis said the success or failure of this policy is likely to depend on how the incremental change affects the consumption behaviour for electronic transactions in Ghana.

Data from Uganda and Congo, where a similar policy was implemented suggest that there will be an immediate decrease in the value of electronic transactions.

However, Tesah’s analysis indicates that in the long run the value of electronic transactions will return to pre-tax levels and continue to grow.

“Given the dire state of public finances in Ghana, a temporary decrease in the value of electronic transactions following the implementation of the policy will be considered a huge success for the government. Government’s projected increase in revenue of 42.9% is bold and necessary for debt sustainability.”

Tesah Capital provide fund management services to pension trustees, financial and non-financial institutions, corporates and individuals.

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