The government’s proposal to levy a 1.75 percent tax on most electronic transactions is a poor strategy for broadening the tax base.
The E-levy, which was included in the Finance Minister’s 2022 Budget statement submitted to Parliament on December 17, has become a contentious subject in Parliament, dividing the Majority and Minority parties.
A number of analysts have slammed the levy as being too high for a start or too punitive relative to its scope, the latest to join that school of thought is Sulemana Braimah, Executive Director of the Media Foundation for West Africa, MFWA.
“E-levy is the most incompetent, lazy, brute and crude way of seeking to widen the tax net,” he posted in a December 14, 2021 tweet.
Braimah joins the likes of legal practitioner Martin Kpebu and musician cum radio presenter Blakk Rasta who are on record as tagging the move as lazy.
- ‘You’ve borrowed and squandered GHS220 billion in five years; what can GHS7 billion in e-levy funds accomplish?’
- Stop hiding; what are your thoughts on the e-levy? – Adongo to the authorities
Contrary to their position, the Finance Minister has described the levy as a major leap in pooling together resources to advance government business.
What Ofori-Atta said about 1.75% levy on electronic transactions
Ken Ofori-Atta introduced a new 1.75% levy on all electronic transactions such as Mobile money transactions, remittances and other electronic transactions.
Fees and charges of government services have also been increased by 15%.
The Finance Minister explained, “It is becoming clear there exists an enormous potential to increase tax revenues by bringing into the tax bracket, transactions that could be best defined as being undertaken in the informal economy.
“As such government is charging an applicable rate of 1.75% on all electronic transactions covering mobile money payments, bank transfers, merchant payments, and inward remittances, which shall be borne by the sender except inward remittances, which will be borne by the recipient.
Ofori-Atta revealed that to safeguard efforts being made to enhance financial inclusion and protect the vulnerable, all transactions that add up to GH100 or less per day, which is approximately 3000 per month, will be exempt from this levy.
