What Akufo-Addo said about digital economy and E-Levy

President Akufo-Addo is in the UK

Akufo-Addo spoke on Ghana's E-Levy and digital economy on the BBC

Akufo-Addo dismissed the suggestion that E-Levy will impoverish the poor

President Nana Addo Dankwa Akufo-Addo has been explaining why his government decided to introduce the Electronic Transfer Levy [E-Levy].

In a BBC interview on Monday, April

Read full article4, President Akufo-Addo in his justification emphasised that it has become necessary to tax the mobile money industry.

He disagreed with BBC's Peter Okwoche on the Focus on Africa show, when he suggested that the E-Levy will further impoverish the poor in the country.

Okwoche asked the President if he has been speaking to experts like IEA's John Kwakye, who had stated, “there are several loopholes in our tax system, that if they are plugged will be able to raise our tax to GDP ratio to something like 20% from the 12%.”

Akufo-Addo who appeared uncomfortable said, “There are experts in government as well and we think it [E-levy] is necessary and that’s the reason why we introduced it. We are talking about taxing an industry and transactions where there are a lot of values being created and we also want to bring those values into government coffers.

“The digital economy is emerging, it’s the biggest economy in the country and for a long period it’s not had any taxation at all and so it is important that they also come into the tax net. Our country is one of the lowest tax to GDP ratios of any country in West Africa and an equivalent economy. I don’t know any group of people, especially businesses when taxes are brought to them they like it.”

He maintained that the current woes of the country’s economy are due to the economic disruptions in the past two years caused by the COVID-19 pandemic.

He noted that the fundamentals of the economy are strong such that even in the hard times of the global economy in 2020, Ghana still recorded positive economic growth.

The President further dismissed comparisons of Ghana’s economic figures with that of the western world.

“It has been a difficult task for all the economies in the world. I think it is important that when you are making a provocative statement, you situate yourself and you speak as if you are living in the same time as you and I, when the world economy as a whole has gone through very difficult times. I can quote you a whole series of statistics about the American economy, the British economy but those things don’t serve a purpose. All that is being recognised is this phenomenon that is going around which would make life difficult, what are you doing to try correct it. That should be the view and that is what we are trying to do,” Akufo-Addo said.

He added, “the recovery programme that we have is one that is considered very credible and it is what is going to give us the opportunity to come out of this period a stronger economy and it is that future that we are looking at when we are attracting people.”

The President's justification is contrary to what his Vice President, Dr Mahamudu Bawumia, has said during an interview on Accra-based Peace FM.

The Vice President made a strong case against any move to tax Mobile Money (MoMo), saying its implementation would adversely affect the poor and further discourage the digitisation agenda of the government.

“My view is that we should not tax mobile money because a lot of the people who are using mobile money transactions are very poor people. For example, someone just sends GH¢5 on mobile money, and why would you want to tax that?” Dr. Bawumia said.

He added, “We want to increase economic activities and the use of mobile money is key. If you pay for government service and you pay by mobile money, the money will go straight into the account of the government. The alternative is to give someone the cash, and you don’t know how much of it will end up in the accounts of the government.

“Sometimes on our toll roads, you go on the Tema motorway and pay some toll; you are not sure how much of it ends up with the government. But if you digitise those payments, you see that suddenly government revenue is going up; and the empirical evidence generally shows that when you digitise, economic activities go up,” Dr. Bawumia said.

Meanwhile, the Minority NDC is challenging the passage of the E-Levy bill in the Supreme Court.

They contend that Parliament did not have the required number of at least half of its members present when the controversial tax policy was approved.

The Tamale South MP and his colleagues want the Supreme Court to declare that the said approval was contrary to law.



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