Choosing between the IMF employment restrictions Albatross and the bitter medicine of the E-levy

The intended introduction of the new tax regime dubbed: the Electronic Levy or E-levy for short, has generated more controversy than any other government policy in recent years.


Perhaps, in terms of the magnitude of heat generated, this can only be compared to the introduction of the Value Added Tax (VAT) in 1995 and rightly so because payment of taxes anywhere in the world is not a pleasant thing to the people.


The introduction of the E-levy was announced by the Minister of Finance, Kenneth Kuntukunuku Ofori-Atta in November last year during the presentation of the president’s budget to parliament.


As part of the presentation, the Minister hinted that the levy when approved, will among other things, help government to raise more revenue to execute its development agenda and also ramp up economic activities in the country.


It is a fact that Ghana for the better part of its existence as a nation has largely depended on borrowing and foreign donor support to finance its annual budgets and this has often created a vacuum leading to the stagnation of its development.


While there is a consensus across the board that the country must find a way to break away from the borrowing syndrome and find new methods of financing its development, what has become the bone of contention is the how.


The means of raising the needed revenue without going out borrowing has always divided opinions and continues to do so even today.


Despite the approval of the entire budget statement of the government with its corresponding appropriation acts, that of the E-levy continues to hang in limbo.


It has generated some high levels of confrontations between the Majority and the Minority Members of Parliament(MPs).


Apart from the MPs, many Ghanaians are equally divided on the intended introduction of the levy with many expressing mixed reactions towards it.



For some, the 1.75% proposed to be charged on electronic transactions, including; mobile money transfers are too high, stressing that it will impact negatively on the people.



However, other sections are of the view that the move will help raise adequate revenue for the massive infrastructural development of the country.



In the ensuing debate, other categories of the Ghanaian people have suggested that, instead of taxing the people who are already grappling with several other taxes, the government should rather return the country to the International Monetary Fund(IMF) for financial bailout.



Those making this proposition are convinced that the E-levy when abandoned and external relief sought from development partners, will help mitigate the suffering of the masses.



However, one must not be oblivious of the fact that assistance from the IMF will come with conditionality's and other restrictions, some of which can exacerbate the sufferings of the average Ghanaian.



The last time Ghana sought financial bailout and policy credibility from the IMF, public employment and other social interventions provided by the state, were frozen and these impacted seriously on the masses, especially the young university graduates seeking employment in the public sector of the economy.



The different shades of opinions expressed since the announcement of the policy require a careful view of the cost-benefit analysis of its introduction for a sound judgment to be made on the way forward.



Even though the E-levy may be a bitter pill to swallow, it may hold the key to making Ghanaians self-reliant in seeking internal solutions to their development agenda.



However, while agreeing to this assertion, the government must equally listen to all the opinions and if possible make the necessary modifications to reflect the views and inputs of the generality of the people.


Beyond government considering all sides of the debate, several measures must be employed to reduce the waste in the system.


Some of these measures must include but are not limited to cutting down on expenditure, especially the ones that bother on income and emolument of the ruling class.


Cutting down on this kind of expenditure will not only engender confidence among the people but will surely convince them to trust in the government.


The current opposition to the e-levy beyond the hardship it is likely to inflict on the people, is also largely borne out of the fact that many people feel that the proceeds may not be put to proper use.


To this end, the President and his government need to prove to the people that, they are different and will appropriately and judiciously handle the proceeds that will acrue from the policy.