GhanaWeb Feature
The E-Levy has generated huge discourse since its introduction in the budget by Finance Minister, Ken Ofori-Atta.
The proposed tax on basic transactions related to digital payments and electronic platform transactions has been met with stiff opposition by sections of the public, civil organisations, among others.
The rate in the
Read full articlebudget was pegged at 1.75 percent and is to apply to electronic transactions that are more than GH¢100 on a daily basis.
While Finance Minister, Ken Ofori-Atta has explained that the country needs the levy to increase her economic fortunes by generating revenue of about GH¢6.9 billion, the proposal has been described as ‘dead on arrival' by the minority who have maintained their unflinching stance to reject a tax they say will worsen the plight of Ghanaians who are already overburdened with hardship.
Some sections of the public also have had the chance to give their say through polls and by far, some of them believe the E-Levy should be abolished entirely because there are other means tax revenues could be generated aside from the existing tax avenue.
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There has not been the option of withdrawing because government maintains its stance, in any case, it only proposed a reduction of the levy to 1.5 which has been rejected again by the minority.
Why the insistence on the part of government to maintain the E-Levy and what will it mean if they decided to ‘listen’ to the concerns of many and completely withdraw the proposed tax?
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In this piece, GhanaWeb takes a look at how the withdrawal of the said tax can affect government’s budget allocations and why perhaps it is almost impossible for the majority in parliament to rescind their decision to go with the E-Levy.
- Government has a total budget of 80.3 billion allocated for the 2022 economic year. Out of this amount, some GH¢6.9 billion is expected to be generated from government’s proposed E-Levy.
- The revenue expected to be generated from the E-Levy has already been allocated to various ministries as captured by the budget, to support projects including infrastructure, public transportation, purchase of buses among others.
- For instance, according to the 2022 budget, up to 0.25 percentage points of the 1.5 percent e-transaction levy or 16.7 percent of the yield from the levy, will be used to support road infrastructure development.
- Ten percent of the 0.25 percentage points, i.e. 1.67 percent of the yield from the levy, is to be dedicated to the improvement in public transportation, including the purchase of buses.
- A new government initiative dubbed YouStart is inherently linked to the Initiative.
- Revenue from the E-Levy is to help sustainably invest in entrepreneurship, youth employment, cyber security, digitalization and road infrastructure, as stated by the Finance Minister.
Considering the number of initiatives and projects directly hinged on the expected revenue to be produced from the E-Levy tax, there is a high likelihood that government’s developmental projects projected for the year 2022 will be halted or will come to a standstill if the E-Levy is withdrawn on their part.
MP for Swedru explains technicalities:
Member of Parliament for Akim Swedru, Kennedy Osei explains what a decision by government to withdraw the E-Levy will mean for the 2022 budget and the economic year.
Speaking to GhanaWeb, he explained that though government can decide to withdraw the E-Levy tax, they must demonstrate how they will generate the stated GH¢6.9 billion which was to be generated from the E-Levy, to make up the sum total of 80.3 billion budget allocation for 2022.
This he explains, will have to be from already existing assurances in the current budget and not from any newly introduced taxes that have not been approved by parliament. He adds that the only time they can introduce any new tax to make up for the said amount will be during the mid-year budget review.
“If government says I have gotten another means of revenue, and even if government says I have gotten another means of revenue, it has to be approved by parliament. They can’t collect any revenue from anywhere when we have not approved. If the existing revenue that we are going to increase collection to meet that 6.9 fine, but they cannot withdraw this one and collect any new taxes, that one has to be approved by parliament.
“The total expected government revenue for 2022 is 80.3 billion. If you say you are not going to take the E-Levy again, it will reduce by 6.9 billion, where is he going to get that 6.9 billion to create the 80.3 billion. Maybe if they say domestic revenue or customs exercise duty, they have to demonstrate how they will get that money and make it up to the total amount.
“Already don’t forget that our budget is in the shortfall of about 55 billion because our expenditure is 145.4 billion and government says he has cut expenditure by 20%. If you take that out of the budget, it will be around 29 billion, if you deduct that from the 55.1 billion, we will still have about 35.1 billion that we have to look for. It’s a decision that government has to take and demonstrate where it is going to get that money from,” Kennedy Osei noted in an interview with GhanaWeb.
Passage of Economic policy, Appropriations Bill and what it means in E-Levy discussion:
Meanwhile, based of parliamentary proceedings, the economic policy of the 2022 budget has been passed, and likewise, the 2022 Appropriations Bill to the tune of 145 billion Ghana cedis which is a revenue assurance has also been passed in parliament.
Technically, this means the expected revenues from the E-Levy which forms part of the 2022 Appropriations has been approved and this provides legal basis for the government to spend 145 billion as the ceiling.
On this note, the majority in parliament can justify their stance to not withdraw.
Following the passage of the economic policy and appropriation bill for these developmental projects, the next time government can propose an adjustment or removal of the E-Levy is when the budget is reviewed by the Finance Minister in its mid-year budget.
If this be the case, Finance Minister must tell the house how it seeks to generate the GH¢6.9 billion that would have been generated from the E-Levy as proposed in the initial budget, to complement the total budget for 2022.
As it stands now though, a withdrawal of the E-Levy by government is not very likely.
Author: Nimatu Yakubu
