Mr. Ofori-Atta outlined numerous interventions and policies the New Patriotic Party (NPP) government has engaged since the start of the COVID-19 pandemic.
E-levy: What happened to Akufo-Addo’s government’s promise of not taxing the poor?
The Minister of Finance, Ken Ofori-Atta, yesterday, presented the 2022 Financial Statement and Budget to Parliament in Accra.
He announced the major policy shift of discontinuing the collection of road tolls on public roads and bridges across the country.
But, significantly among all of government’s intended revenue collection and expenditure in 2022 is the introduction of the electronic levy.
He indicated that government has decided to place a levy on all electronic transactions to widen the tax net and rope in the informal sector.
The E-Levy covers electronic transactions, including mobile money payments, bank transfers, merchant payments and inward remittances and the 1.75% to be charged will be borne by the sender except inward remittances, which will be borne by the recipient.
He further stated that the levy, which is supposed to take effect next year January after Parliament approves the budget will be used to support entrepreneurship, and ensure youth employment.
This new policy totally shifts from the stance of this government prior to the 2020 general elections.
Vice President Dr. Mahamudu Bawumia in an interview on Accra based Peace FM in August 2020 clearly stated that taxing electronic transactions will be crude on poor people.
He argued the popular mobile money (MoMo) ecosystem and by extension electronic transactions comprises of a lot of poor people therefore taxing it won’t be prudent.
“I don’t think Mobile Money should be taxed because most of the people who use the service are poor people so if you put more taxes on it they will suffer”, he said.
“I don’t think Mobile Money should be taxed because most of the people who use the service are poor people so if you put more taxes on it they will suffer,” he stated.
For many experts, much as this levy is a total u-turn on Dr. Bawumia’s earlier promise; it also defeats the digital economy agenda by the government.
Speaking to the media after the budget presentation, the Minority spokesperson on Finance, Dr. Cassiel Ato Forson said the tax introduced will worsen the hardships faced by Ghanaians.
“We are hearing that they are going to introduce electronic transaction levy which is going to affect mobile money transaction and bank transfers as well as remittances…We think this is not acceptable and we will advise ourselves when the time comes.”
“Let me also say that we have seen a 15% increase in all government fees and charges and we think that it is a bit too much and that the government may need to think about it. These new tax measures will bring great suffering to Ghanaians who have already been choked with taxes.
The electronic transaction levy will not only worsen the hardships but will significantly compromise inward remittance which is relied upon heavily by many Ghanaians. We wish to vigorously assure the people of Ghana that we will oppose the killer taxes and we will ensure that any one of them that will affect the lifestyle of Ghanaians will be rejected,” Dr Forson explained.
But according to the Minister of State at the Ministry of Finance, Charles Adu-Boahen, the introduction of the e-levy is not to burden the poor.
He argued that this move will increase government revenue in order to fulfil its infrastructure obligations.
“A lot of thought was put into trying to find a solution where we could share the burden,” he said.
“We have to provide roads and roads are something everybody wants… roads are not only for people to move but also to evacuate produce,” the Minister of State explained further.
Under the E-levy, transactions covering mobile money payments, bank transfers, merchant payments, and inward remittances will have the levy imposed on them.
The levy will be paid by the sender, but be waived for transactions that amount to GHS 100 or less in a day.
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