Electronic Transaction Levy popularly known as Electronic Levy or E-levy is a tax applied on transactions made on electronic or digital platforms. In recent times E-Levy has gained unprecedented popularity in Ghana, it is the topical issue on the lips of every Tom, Dick and Harry in the country. But why the sudden popularity of E-Levy in town?
On 17th November 2021, the Minister of Finance and Economic Planning, Hon. Ken Ofori-Atta in fulfilment of a constitutional mandate went to Parliament to present the 2022 Budget Statement and Economic Policy of government. During his presentation on the floor of the house he announced a number of revenue measures proposed by government to shore up the economy. One of these is E-Levy which has become a very contentious issue that has sharply divided Ghanaians albeit along political lines.
Hon. Ken Ofori-Atta, expatiating further on E-Levy opined that government will charge an applicable rate of 1.75% on all electronic transactions covering mobile money (MoMo) payments, bank transfers and merchant payments which shall be borne by the sender and also inward remittances which shall be borne by the recipient.
Experts claim that E-levy is projected to rake in about GH₵6.96, 7.89, 8.92 and 10.09 billion in 2022, 2023, 2024 and 2025 respectively. The proceeds of E-Levy according to the Finance Minister would be a major boost to government project financing and other capital expenditure especially investment in roads and other key infrastructure.
Notwithstanding, the introduction of E-Levy by government has generated so much heat in the country to the extent that in December 2021, during a debate on E-Levy on the floor of Parliament a brawl ensued as some Members of Parliament (MPs) on both sides of the house started punching, ripping shirts, kicking and head-butting each other due to serious disagreements on the E-levy bill which had been laid before the house. Though shameful and condemnable to say the least, it underscored how tetchy and cantankerous E-Levy has become to the ordinary Ghanaian.
E-Levy since its proposal has expectedly dominated discussions in the media both print and electronic as well as the trending issue on social media platforms. It has also dominated informal discussions at homes, in commercial vehicles, workplaces and rightly so because no citizen no matter their social status or ranking ordinarily wants to pay more taxes and so the introduction of any new tax by government automatically draws the ire of the citizenry.
Unfortunately building a consensus on E-Levy has proven to be elusive, almost a wild goose chase as the issue has taken a complete political twist. Both proponents and opponents of E-Levy have been unyielding and uncompromising in their stance for or against the tax. Whilst government is bent on bulldozing its way through to promulgate the tax by every means possible, opposition elements have fiercely resisted any such attempt with all arsenals available to them leading to a stalemate.
In the court of public opinion, the situation is not different, whilst a section of the citizenry is against E-Levy, some support it in principle especially in the light of our quest to achieve a "Ghana Beyond Aid" as touted by government. Some Ghanaians, a good number of our people however remain indifferent regardless waiting to see how things will turn out.
Those who are opposed to E-Levy claim that government has borrowed so much plus other numerous taxes paid by Ghanaians and for that matter there is no excuse whatsoever to introduce a new tax measure to prop up the economy especially not at this time when citizens are already feeling the pangs of rising cost of living occasioned by rising fuel prices etc.
Some have also argued that with the benefit of the numerous natural resources available in the country like cocoa, gold timber, diamond, bauxite, manganese, crude oil and others, government has no reason to overburden Ghanaians with a new tax.
To some, government should rather cut down profligate expenditure or better still go to the International Monetary Fund (IMF) for a bailout. The big question however is, how does more debt from IMF with all the harsh conditionalities cure the problem of debt overhang? It is obvious that raising local revenue, cutting down government expenditure and growing the economy rather is the surest way to go. Homegrown solutions remain our trump card.
The solution to our economic challenges therefore does not lie with the IMF or any foreign aid, rather, raise domestic revenue and invest in the productive sectors of the economy that will bring forth the much-needed growth and jobs and that is where E-Levy becomes not only timely but also relevant and expedient.
Proponents of E-Levy have argued that the tax is being introduced not because of mismanagement of any sort as being trumpeted by the opponents but as the economy expands the need for quality infrastructure and turnkey projects like roads, hospitals, schools and others become apparent and that government cannot go to the capital market every now and then to raise money to fund these projects which are badly needed by the citizenry.
There is therefore the urgent need for us citizens to pay some more taxes to increase government revenue hence the introduction of E-Levy. The economy is already in dire straits due to the effects of the COVID 19 pandemic and needs some more capital injection for us to return to normalcy.
From the arguments advanced for and against E-Levy I am of the considered opinion that in the interest of the state and in the spirit of patriotism we should support the implementation of E-Levy in principle but sound a word of caution to government to ensure every single pesewa collected through E-Levy would be accounted for to the latter and that the monies would rightly be used for the purposes for which they are being collected.
Though difficult, we should understand that it is for our own good and for our better future. The "Big Squeeze" is on even in developed economies like UK and US. Ours is a burgeoning economy and it will take you and I to make the economy work again.
It is refreshing to note that government has been able to get the Telecommunication Companies (Telcos) to reduce the charges on MoMo transactions by 25%, this is quite progressive but I would like to humbly plead with the Telcos to rather consider slashing their charges by 50% to lessen the plight of Ghanaians. That said I am told government has reduced the applicable E-Levy charge from 1.75% to 1.5%.
Here too I would like to implore government to also consider reducing the applicable rate to a flat 1% to make it easier for citizens to pay and pay with joy voluntarily. With time government can gradually increase it so that the burden on citizens is lightened.
Government should however note that, with or without E-Levy it should explore other genuine ways to raise domestic revenue to ensure the economy stays afloat.
If we can pay 2% to the Telcos for MoMo transactions, it shouldn't be too difficult for we the citizens to also contribute something on electronic transactions to help government achieve its vision for us.
In view of the fiscal pressure on government I wish to suggest some revenue measures government can take to ensure the economy comes back on track. These measures are very well known, what matters most is implementation. These measures include controlling and tightening all loopholes that exist in the local revenue collection chain, especially leakages identified by the Auditor General in his annual reports. Stamping out corruption and severely punishing corrupt public officials will save the public purse.
Secondly, a lot of our compatriots are in the informal sector making decent income from their informal sector activities and businesses but do not pay any direct taxes due largely to tax collection inefficiencies and bottlenecks.
We therefore need to widen the tax net to capture all tax "escapees" to increase the quantum of domestic revenue that accrues to the state.
Thirdly In the 2022 budget the Finance Minister announced as part of the revenue measures that all tolling points would be abolished and toll collection personnel reassigned. Since then, all tolling points have been duly removed. I think that this decision must be reviewed and re-looked by government. According to Mr. John Boadu, General Secretary of the ruling NPP, all the 37 toll booths in the country generate only GH¢78 million and of these 37 toll booths, just a few of them raise about 80% of the total amount.
Mr. Duncan Amoah Chief Executive Officer (CEO) of the Chamber of Petroleum Consumers (COPEC) in justifying the decision by government argued that the removal of these toll booths will not come at any cost to Ghanaians. According to him the amount of fuel we waste annually while marking time at these toll booths is in the region of GHS 400 million per conservative estimates and so it didn’t really make any economic or mathematical sense to continue taking the tolls,”
He added that “of the about GHS 71 million we generate from our various toll booths, the transport ministry was clear that we lose as much as 40% to 80%, and so removing the tolling points completely sounds like a good option. But I beg to differ.
In fact, it is ridiculous that of all the major highways and roads we have in the country there are only 37 tolling points concentrated mainly in the cities. Tolling points, I believe should be spread across all the 16 regions as a major revenue collection tool. Indeed it is not only those who reside in Accra and Tema and the major cities or those who ply these highways who are supposed to pay road tolls. If the roads are good citizens would have no qualms paying road tolls and that would bring income to government.
Obviously, we cannot toll many other major roads and highways because most of these road infrastructures are in a deplorable state and not toll worthy. So, we need to start by fixing some major roads and highways if not all for tolling purposes. When that is done then we can rely on modern technology to ensure leakages at all toll points are plugged to ensure the state benefits fully from road tolls. We can streamline and make the road tolling regime better and efficient to rake in more revenue for the state without necessarily introducing a new tax.
Tourism is now big business in the world. The Dubai's, Maldives, Bahamas and others are all thriving because of tourism. This is the time to cash in on our tourism potentials to rake in more revenue for the state. Luckily for us domestic tourism or eco-tourism is largely an unexplored area with untapped potentials.
We need to be innovative in our approach to reposition Ghana as the tourism hub in West Africa and Africa as a whole. For instance, with Ghana's international image as a gold producing giant, we can develop a novel gold city where citizens and tourists can visit and walk on something like a 20 metre or less pure gold street at a standard fee. It would be the first of its kind anywhere in the world and people would love to come and walk on pure gold for that 'heavenly' experience.
The gold village would have an upstream miniature gold refinery and an industry and shops where tourists can obtain all forms of pure unadulterated gold jewelry, that is pure gold items like ear rings, nose rings, rings, watches, chains, bracelets, anklets wedding bands at a cheaper rate.
Again, since Ghana is currently the second largest producer and exporter of premium quality cocoa beans in the world, we can take advantage of that and build a solid chocolate brand hinged on the idea of a chocolate city in Ghana where anything cocoa can be obtained by citizens and tourists at a fee.
All that I'm saying is, we should rethink our strategies for generating revenue for the state. It cannot be business as usual. There are more innovative ideas that we can explore to generate revenue for the state. Government should work hard to give true meaning to shifting away from "taxation to production" mantra to lessen and lighten the burden on Ghanaians.
Fellow Ghanaians, let us rally behind the government and ensure government accounts for all monies collected especially through E-Levy. Profligate expenditure, opulence and ostentatious lifestyle of government and public officials should be a thing of the past. Let us all tighten our belts for a Ghana beyond aid. We can do it!
Let us be citizens and not spectators, this is the time our nation demands our devotion the most. Let us rise and be counted. Ghana will work again.
May God continue to bless our homeland Ghana and make our nation great and strong.
Felix Kwame Quainoo
The writer is a freelancer from Aboso in the Western Region