Dr Alex Ampaabeng, Fiscal Policy Specialist, Oxfam Ghana, says the implementation of the proposed 1.75 per cent Electronic Transaction Levy will slow down the country’s digitalization process and promote a cash-based economy.
The E-Levy outlined in the budget statement and economic policy of the government for the 2022 financial year introduces a 1.75 per cent levy on mobile money transactions and bank transfers.
Commenting on the budget in an interview with Ghana News Agency, Dr Ampaabeng, who applauded the government for several initiatives, said the E-Levy was retrogressive.
He indicated that the relentless efforts by the government to digitalize the economy, most especially digitalizing the Metropolitan, Municipal and District Assemblies, would boost revenue mobilization and enhance efficient service delivery.
He noted that Ghana through its Ministry of Communication and Digitalization was already playing a vital role in the development of a sturdy framework to digitalize and bolster a cashless economy and described the digitalization policy of the government as an excellent strategy because it would close every loophole in the country’s revenue collection chain.
Vice President Dr Mahamaudu Bawumia is spearheading the country’s digitalization process under the catchphrase “Digital Ghana” to ensure government institutions are digitalized for efficient service delivery.
The agenda is to formalize Ghana’s informal sector and reduce cash dominance in economic transactions.
In line with digitalizing Ghana’s economy, Finance Minister Ken Ofori-Atta, presented the national budget for 2022 to Parliament on Wednesday 17th November 2021, proposing to introduce an Electronic Transaction Levy of 1.75 per cent.
According to the minister, the policy was intended to help “widen the tax net and rope in the informal sector,” and would, therefore, be centred on mobile money payments, bank transfers, merchant payments and inward remittances, effective February 1, 2022.
But, Dr Ampaabeng told GNA that the proposed E-levy was retrogressive and that numerous taxes and levies were already being charged on the value of items.
“Even if you want to charge, you charge the value that has been created in the course of the money moving from one hand to another,” he said.
With the government’s clear agenda already set on promoting a cashless economy and digitizing public institutions to enhance service efficiency and effectiveness, the policy would have served its purpose if the government had made mobile money transactions free, he added.
“The best policy response here should be making the platform completely free and compel Telcos to take off every charge,” he stated.
The government could capture people’s data if the electronic transaction was free, then later the tax policy could be implemented.
“You are at the beginning of capturing people’s data and at the very beginning implementing such discouraging policy,” he quizzed.
The Fiscal Policy Specialist appealed to the government and advisors to take a second look at the E-levy policy to help achieve Ghana’s digitalization agenda.