Reduce the 1.75% e-levy! - Prof. Joseph Osafo pleads with gov't

Head of Psychology at the University of Ghana, Prof. Joseph Osafo, has welcomed the 2022 Budget Statement and Economic Policy of the Akufo-Addo administration but called on the government to readjust the e-levy tax deductions.

Speaking on Peace FM's 'Kokrokoo' programme, Prof. Joseph Osafo believed the budget, particularly regarding the e-levy as declared by the Finance Minister, will help with the development of the nation.

However, he cautioned the government on its 1.75% tax deductions on electronic transactions.

The Minister, reading the budget on Wednesday, November 17, 2021, abolished road tolls and introduced e-levy expressing optimism about its importance to Ghana's development.

"After considerable deliberations, Government has decided to place a levy on all electronic transactions to widen the tax net and rope in the informal sector. This shall be known as the 'Electronic Transaction Levy or E-Levy.' Electronic transactions covering mobile money payments, bank transfers, merchant payments and inward remittances will be charged at an applicable rate of 1.75%, which shall be borne by the sender except for inward remittances, which will be borne by the recipient.

"Mr. Speaker, to safeguard efforts being made to enhance financial inclusion and protect the vulnerable, all transactions that add up to GH¢100 or less per day (which is approximately GH¢3000 per month) will be exempt from this levy. A portion of the proceeds from the E-Levy will be used to support entrepreneurship, youth employment, cyber security, digital and road infrastructure among others. 3y3 Baako, Ye nyinaa bey tua. Mr. Speaker, this new policy also comes into effect (once appropriation is passed) from 1st January, 2022. Government will work with all industry partners to ensure that their systems and payment platforms are configured to implement the policy," Ken Ofori-Atta told Parliament.

But Prof. Joseph Osafo fears the 1.75% e-levy could discourage Ghanaians from undertaking e-transactions.

He proposed that the government consider reducing the 1.75 percent and make it affordable for Ghanaians to pay the levy without breeding apathy.

". . the increase of 1.75% that is to be added, it's on the high side. I dread it might have a certain negative effect. . . I don't think this is something that should be kept as it is. We have to reduce it," he stated.

Meanwhile, Parliament will sit to deliberate on the budget on Tuesday, November 22.