”E-Levy: Additional indirect taxes”- Kingsley Martey, Senior Economist, Databank

Finance Minister, Ken Ofori-Atta.

By Edmond Tetteh.

Even before it takes off, the proposal by the government to raise enough revenue through the introduction of tax on ‘momo transactions’ as captured in the 2022 Budget presented to Parliament by the Finance Minister has come under intense scrutiny by the Minority, Tax Experts, and indeed a cross section of Ghanaians.

To those opposing the move, the decision is a non-starter, but the government thinks it has the potential to be the game changer in raising the required revenue for development.

Kingsley Martey, a Senior Economist at Databank, gives his perspective on the issues in an interview with GBC News.

”Let also agree that the government badly needs revenue as you have heard. I agree or we all agree that the government badly needs revenue because of the nature of our revenue to GDP ratio, what it means debt affordability in terms of how much we use to service our debt and so on. So the government really needs the revenue but, the next question is, is the government really ready to raise the amount of revenue there to check for instance 2022’s GH₵6.9 billion Ghana Cedis. Now if you go on all things due to equal basis it might happen, but you know very well that or we all know very well that this levy will be applied on human beings and there are behavioral signs that we should put in the whole analysis”.

”So that if human beings transact certain values before the tax or before a policy while the policy has been implemented we expect the human beings to adopt some coping mechanism……..to the revenue expectation from the usual transaction that they normally receive”.

”So for instance, before the tax after the result of Covid we had a significant increase in the adoption of digital payment and transactions. Now with the tax and as the economy returns to some sort of normality, you might find some individuals trying to avoid the digital ecosystem, those who will not avoid the digital ecosystem, might decide to defer their transactions to a time when they execute it without paying tax, or change their transactions such that they avoid paying much and that can negatively impact the revenue expectation”.

”Now the reason why it appears Ghanaians are fatigue is because as you know and as stated in the 2022 Budget only about 2.3 million people pay direct taxes now the rest who do not pay the direct tax are are to be captured through indirect taxes but in the process of capturing these people through indirect taxes, we also capture those who already pay taxes and even more additional indirect taxes”, according to the Senior Economist at Databank, Kingsley Martey.

LEAVE A REPLY

Please enter your comment!
Please enter your name here