The Finance Minister, Ken Ofori Atta presented the 2022 budget to parliament yesterday, 17th November 2021 and major questions are beginning to come up. The government has given indications of additional taxes from the 202 financial year.
Beginning January 2022, all businesses and individuals who wish to pay their tax via Mobile Money will pay additional taxes on their taxes above 100 cedis.
This means that small businesses such as myjoy ice cream, paying a tax of 300 cedis monthly via mobile money will pay an additional 1.75 percent tax on their tax payment.
Could this be a case of double taxation for businesses and individuals wishing to pay their taxes via mobile money?
It is not immediately clear how the new directive will affect small businesses taking advantage of mobile money services and individuals transacting their tax financials via MoMo.
However, with the current directive, there is a high possibility that businesses will have to be ready to pay tax on their tax, should they decide to consider Mobile Money as a payment option.
Businesses are already burdened with many taxes, making it very difficult for businesses to thrive and create employment.
Tax and economic experts have argued that majority of the economic problems of many developing countries such as Ghana is due to high taxation.
The numerous taxes make it difficult for direct foreign investments in the country, such as the establishment of businesses, which are major drivers employment and economic development.
Low taxes therefore, encourages business development and attracts foreign investors and businesses to do business in the country. This means employment is likely to increase, and with it comes better salaries and improvement in the overall living conditions of people.
The implication of the current move to tax mobile money transactions is that, it would generally reduce the number of people who use the service, especially businesses who are already paying so much tax.
According to Statisica, there were over 180 thousand active mobile money agents in 2019.
With decreased mobile money transactions, individuals who have built a business around this economy are likely to be negatively affected.
Also, in a system that wants to encourage a cashless society, this move may be counterproductive, as more and more people would go back to physical cash transactions, with its high security risks.
It is clear that the 1.75 percent tax on mobile money announced by government in the 2022 budget comes with numerous challenges for businesses and citizens. Not only will those directly involved in the mobile money business be affected, but customers and other businesses will generally be affected negatively. Infact, the implications of this move by government is yet to be fully assessed. Things will indeed not be the same again with this current development.