Electronic Transfer Levy And Other Matters

News Commentary On Electronic Transfer Levy And Other Matters

By Bubu Klinogo, A Journalist.

The past few months have been dominated by discussions around the Electronic Transfer Levy popularly known as E-Levy or Momo Tax. The Minister for Finance, Ken Ofori Atta in his presentation of the Budget Statement and Economic Policy of the government for the year ending 31st December 2022, announced plans to raise some revenue through the imposition of a levy on Electronic Transfers. According to government estimates, about 6.9 billion Ghana cedis could be raised in a year through the levy when a charge of 1.75 percent is imposed on daily transactions above 100 Ghana cedis. This proposal has however been met with opposition from the public. The Minority in Parliament, finance and economic analysts, Civil Society Organisations have all described the proposal as retrogressive and counter productive. As a result, the Minority has waged a relentless war in Parliament to block the passage of the law which will give legal backing to the collection of this levy.

As it stands now, the Bill can best be described as being in limbo. The current stalemate has brought to the fore a number of issues. What consultations did the government do before coming out with the proposal? It is intriguing that right from the onset, the telcos and the banks, the key implementers of the policy, expressed reservations, an indication that they were not consulted. The question is, how were they then supposed to implement such a policy when their inputs were not sought? But that is beside the point. Against all odds, the government itself has described the policy as innovative and a game changer. According to Spokespersons of the government, the revenues expected to be generated from the levy will be channelled into youth employment initiatives and road infrastructure. Yes, these are very critical sectors of the economy which need immediate attention. On a daily basis, we complain about the bad nature of roads and the high level of unemployment in the country. Therefore, ordinarily any attempt to solve these problems must be embraced wholeheartedly by all and sundry.

However, it is pretty obvious that the government has chosen the wrong formula to solve the right problem. There are so many issues with this E-Levy. Apart from the problem of multiple taxation, the levy is also discriminatory. Taxes or levies are supposed to be paid on profits and not income. It is therefore unacceptable for instance for a levy to be paid on a loan, a tax or a salary simply because it was transferred electronically. It is again troubling that while two people transacted the same business, one is made to pay extra by way of a levy because they use electronic means while the other uses cash. When this Bill is passed, the first major consequence will be a reduction in electronic transactions and a return to the days of cash at a time the government is investing in digitisation to promote a cashless and paperless economy. Already, reports show that since the announcement of the E-Levy policy, the rate of increase in electronic transactions has reduced considerably. Elsewhere, people are given a discount by making electronic payments.

As indicated earlier, it is good that the government wants to tackle the issues of infrastructure and employment. Government must however look at other ways of generating the required revenue. It must first of all revisit the cancellation of the collection of road tolls. No matter how little is generated from the tolls, it can still be used to pay one or two Contractors. What is more is that the collection of road tolls serves as a source of employment for a number of citizens including people living with disabilities. Is it not ironic that the government is talking of creating jobs through the e- levy and at the same time depriving people of their sources of livelihood? The government can also save a lot of money if it cuts down on wasteful expenditures and tackles the canker of corruption in the country. We can also begin to talk of the unthinkable salaries and allowances paid to certain Chief Executive Officers of State Owned Enterprises and quasi State Enterprises, most of which make huge losses on yearly basis.

When all the loopholes are plucked, the government can turn to Bretton Wood Institutions for assistance. There is no doubt that there is some politics around going back to the International Monetary Fund. Yes, members of the current government described the former administration of being incompetent because they went for a bailout from the IMF. In fact a party was held to celebrate Ghana’s exit from the IMF program. It is obvious that the past comment is haunting the current government hence the hesitation to go to the IMF in the midst of this economic crisis. The government must be bold, eat the humble pie and take that critical step of approaching the Fund. That is the only way out, for as it stands, the E Levy for now is in limbo.

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