Split Proposed Rate Of E-Levy Between Consumers And Telcos – IEA

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E-Levy
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The Institute of Economic Affairs (IEA) has urged the government to adopt urgent measures to resolve the ongoing impasse over the E‑levy in parliament, with a proposal to split the levy between telecommunication service providers and consumers.

According to the IEA, when this is done, Ghanaians, especially their representatives in parliament, will reach a consensus to allow the smooth passage of the proposed levy on electronic transactions.

“Government must work to resolve the current budget stalemate in parliament over the E‑levy as a matter of urgency. To that end, we suggest splitting the proposed rate of 1.75 percent between telcos (1 percent) and consumers (0.75 percent). We believe this is a compromise that both the majority and minority can accept”.

IEA

Need for measures to avoid a bailout

Director of Research at the IEA, Dr. John Kwakye, advised the government to take the bull by the horn and adopt measures to address the country’s economic woes so as not to end up knocking at the doors of the International Monetary Fund (IMF) once again. Should government fail to adopt these proposed measures, the economist believes, Ghana will eventually return to the IMF for the 17th time. The consequences, he said, will be a reduced confidence by the international community in the country’s ability to manage its affairs.

Proposed measures by Dr. John Kwakye ranging from short-term to long-term that focused mainly on revenue generation included a swift passage of the Tax Exemptions bill to reduce the scope and scale of exemptions as well as the enforcement of tax compliance, especially by professionals.

Others are: introducing segregated corporate tax ranging from the current level of 25 percent for indigenous companies to 35 percent for foreign companies, as well as a temporary ‘windfall tax’ of 10 percent on ‘excess profits’ of mining companies, oil companies, telcos and banks.

Dr. John Kwakye advised that “They should also abolish the current import benchmark discount of 30 percent for general goods and 10 percent for vehicles”.

Call for measures to reduce expenditure

The IEA Director of Research further urged Government to introduce urgent measures to reduce its expenditure. He suggested restructuring and downsizing the ministries from the current 30 to a maximum of 20 – a move that would consequently see the number of ministers and their deputies drop from 86 to 56 – in addition to reducing salaries of the Executive by 20 percent.

In January this year, government announced a 20 percent cut to the budgets of ministries, departments and agencies (MDAs), as part of measures to ensure fiscal consolidation. However, an international rating agency, Moody’s, stated that this measure will be politically difficult for the government to implement but on his part, Dr. Kwakye called for its enforcement.

With the Minister of Finance disclosing that the Free Senior High School (SHS) had cost the nation GH¢7.62billion as of July 2021, Dr. Kwakye called for the introduction of a government-parent cost-sharing arrangement.

Amidst the growing depreciation of the cedi and the recent increments in fuel prices, there are reports in the local media that government will hold a crunch cabinet meeting to find solutions to the raging economic challenges. According to sources, the meeting will discuss whether government should continue to push through with the E-levy Bill or resort to the IMF, in the face of the current fiscal difficulties.

This is against the backdrop that the Finance Minister had earlier indicated that going to the IMF is not an option the government is considering in response to calls by experts for the West African nation to seek an IMF bailout.

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