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Is E-Levy a Necessary Evil or the Best Tax Alternative in Ghana?

Feature Article Is E-Levy a Necessary Evil or the Best Tax Alternative in Ghana?
MAR 7, 2022 LISTEN

Ghanaians have recently been confronted with fear, anxiety and disapproval, with the announcement in the budget of the possible introduction of the Electronic Transfer Levy which has simply come to be known as E-Levy. This type of tax applies to electronic or digital platforms. The proposal met a stiff opposition when the Minister of Finance Hon. Ken Ofori-Atta on November 17 2021, announced in a budget statement to parliament that the government has decided to tax all electronic transactions in the informal sector with the cost of 1.7 per cent to cover the tax net. According to the Minister, it has become necessary to introduce the levy due to a rise in the use of electronic or digital platforms for transaction due to COVID -19 pandemic.

A great deal of controversy has surrounded the e-levy proposal. It has been opposed by the opposition party and the public at large. It has not been easy to vote on the bill and it will never be easy. The NPP cannot easily pass the bill because it has a very slim majority in parliament (i.e. by a mere vote).

The Speaker of Parliament, Hon. Bagbin, who happened to be an NDC member, left the room just when voting on E-Levy was about to take place. He complained that he needed medical attention as he was not feeling well. That was a sure way of denying victory for the NPP government.

The first deputy speaker, and a member of NPP in parliament, Hon. Joe Osei Owusu, had to take the seat of the Speaker. A problem ensued: A speaker does not take part in the voting process of the house but the deputy Speaker insisted he was just acting as a Speaker and since he came to parliament as an MP he would vote.

There was confusion in Parliament which was ignited by the NDC MPs. Physical fight, violence and hurling of chairs took place in the house - The brawl that occurred was the most uncivilised and shameful ever to occur in Ghana's parliament. The MPs must bow their heads in shame and apologize to all Ghanaians. Some of the MPs left the house in shredded clothes and tattered coats. Those who removed the seat from the deputy Speaker received hefty punches in their face. A vote to pass the E-Levy bill could not come off.

President Akufo-Addo stated gave three reasons why the E-Levy should be accepted: The E-Levy, would be a driving force which will propel Ghana beyond aid. He continued that it will widen the tax net for many people to contribute to tax payment. Secondly, it will help to boost tax to Ghana's GDP without explaining how. Thirdly, it will propel Ghana towards achieving a dream code-named "Ghana without Aid".

Many Ghanaians are of the belief that Nana Addo and his government have borrowed billions of dollars from both China and IMF. Nana Addo is very much aware that if he makes a mistake to ask for more loans from IMF, all what he has achieved during his rule will be disabled by stiff regulations by IMF. As a condition for a new loan, the IMF will compel the government to dismantle free SHS education, free "paasco" for high school students, as well as unnecessary government expenditures. Others include all new employments to Ministries, Ghana Education Service, and allowances paid to teachers and nursing trainees will cease.

What then is the state of Ghana's economy today? At the level of an irreducible idiom, Ghana is completely broke. Ghana is so broke that, the Speaker affirms, we may not be able to pay salaries to public sector workers for three months or more unless a miracle happens. The Minister of Finance has also confirmed that in a "legitimate reality", there is no money. He also adds that soon there will be no money available to finance the free SHS education. The government must be able to pay lecturers and civil servants in order to ensure peace in the system and also to create more jobs.

In fact costs are rising in Ghana. Fuel, housing, electricity and water rates have gone up by 27.7 percent. Food inflation, according to Ghana Statistical Board, rose to 13 percent from 12.8 percent within a month. Non-food inflation went up to 14 percent in January 2022 compared with 12.2 percent in December.

There is no dispute that Ghana's economy is in deep crisis. The country is experiencing unsustainable public debt, rising inflation, ever rising cost of living, and a rapidly depreciating cedi. Ghana's cedi has performed abysmally since 2022. Despite the effort of Bank of Ghana to hold it down, the Ghana's cedi is the worst among fifteen top performing currencies in Africa recently. The economy is behaving like a runaway train down a steep hill and moving rapidly towards a broken bridge. The effects of these are severe hardships for Ghanaians especially those within vulnerable groups. As a result of the horrendous low point we have now reached, it is clear that urgent intervention is required to save the economy from total collapse.

Nana Addo and the NPP government are aware that if they choose the IMF option, they will lose all the gains they have made and the harsh IMF directives can easily push the party into opposition. Therefore, generating money internally is the best option. Hence the E-Levy. The opposition NDC is against the bill and series of demonstrations have been held to protest against it. It is the prayer of the opposition NDC and demonstrators that Nana Addo will choose the IMF option so that his lack-lustre performance will be exposed.

Words coming from some of the demonstrators are dangerous. They are shouting for military coup. In fact Ghana does not need a coup. The best course of action for any serious government in this situation is to severely cut down expenditures by way of reducing salaries and fringe benefits of politicians so the public can empathize with the situation. Yet, like the monkey holding onto a banana used to trap his fist, the politician will continue to hold onto their fat salaries and fringe benefits till the worst happens. God save our motherland.

Columnist: Stephen Atta Owusu

Author: Dark Faces at Crossroads

Email: [email protected]

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