E-Levy: Forbidden fruit or necessary evil?

After months of heated debates in Ghana’s parliament over the introduction of a controversial Electronic Transaction Levy contained in the 2022 Budget Statement, the Bill was finally passed into law on Tuesday, March 29, 2022.

The Electronic Transaction Levy also called the E-levy, is a proposed tax to be applied on transactions on an electronic platform. The proposed levy, which was anticipated to come into effect on February 1, 2022, had an initial charge of 1.75% (later reviewed to 1.5%) of the value of electronic transactions. It covers mobile money payments, bank transfers, merchant payments, and inward remittances. The originator of the transactions will bear the charge except for inward remittances, which will be borne by the recipient. There is an exemption for transactions up to GH¢100 per day.

When the new tax was announced by the Finance Minister in Parliament, discussions on the E-Levy soon started dominating public discourse, on and offline, and in no time it triggered a widespread pandemonium across the length and breadth of the country - Parliament House became a boxing arena where the minority and majority exchanged blows over disagreements related to the implementation of the E-Levy; media outlets swam in the razzmatazz emanating from discussions on the subject to set their agenda on their platforms; policy makers joined public debates to share their views on the subject; politicians pitched camps to make somewhat virulent comments on the subject that gave a shriek of fear of an imminent catastrophe to visit the country; and the streets plunged into bulls and bears analysis of the impact of the E-Levy if implemented.

Introduction of new taxes and the uproar and fierce protestations that greet them are not new to Ghana. In 1995 when the government of President Jerry John Rawlings proposed the introduction of the value-added tax as a measure to widen the tax net in order to rake in more revenue to fund Ghana’s developmental projects, the opposition party and a section of Ghanaians vehemently opposed the implementation of the tax. Street protest in Accra, organized by the Alliance for Change, an umbrella organization of groups opposed to President Jerry Rawlings' government demonstrated against the implementation of the tax.

The demonstration christened Kumi Preko led to loss of lives. According to a 2013 Afrobarometer Briefing Paper by the Centre for Democratic Development (CDD), the tax was subsequently withdrawn as a result of widespread protests, and reintroduced in 1998 after comprehensive education of citizens.

Similitude of the past, the E-Levy, a tax meant to ensure the tax net is widened to get more revenue to run government business has not been spared the foamy fury of Ghanaians.

The position on the tax is sharply divided between the government in power and the opposition party who through its legislators have communicated their intentions in no uncertain terms that they stand completely opposed to the implementation of the levy in whatever form it may be presented in the House for consideration. Indeed, true to their word, the opposition party rejected the entire government Budget Statement which contained the E-levy proposal for consideration.

Argument against the E-Levy

The minority caucus in parliament, mainly constituted by the opposition New Democratic Congress, argues that they are opposed to the levy on three grounds: • Implementation of the levy will deepen the suffering of the Ghanaian people; • The tax is an opportunistic move by the government and a lazy way of taxing people; and • Government is reintroducing a functionally cash-economy against the development of the digital economy which will be a disincentive to the growth and development of the digital economy .

Minority Rejects Budget

On Friday, November 26, 2021, the Minority, after a walk out by the Majority in parliament over a disagreement on a voice vote, rejected the Budget Statement and Economic Policy of the government.

The Minority, however, in media briefings and other public platforms has indicated that their caucus will be willing to cooperate with government to approve the budget if it expunges the E-Levy from the Budget Statement. It was evident at this point that the Minority considers the proposed electronic transaction levy as perhaps a ‘forbidden fruit’ that neither ought to be touched nor eaten.

Majority Reverses Minority Decision

According to a Graphic online report of November 30, 2021, the Parliament of Ghana has voted in favour of the 2022 Budget Statement and Economic Policy of the government, overturning the earlier rejection of the budget by the House (Minority in parliament).

‘’The approval of the budget was undertaken by the 138 members of the Majority, including the First Deputy Speaker who presided over proceedings. The Minority members, who had voted against the budget were not in the Chamber of the House to take part in proceedings leading to the approval of the budget’’, the report highlighted.

Evidently, the approval of an earlier rejected budget gives the clearest indication of the positional play of both the majority and the minority on the subject. The majority, at this point, believes that irrespective of the concerns of the minority in parliament, the E-Levy needs to be approved in order to help meet developmental demands on government. The battle lines are drawn; verily, verily, the minority remains adamant to accept a budget that has a forbidden fruit, while on the other hand, the majority considers this tax as a necessary evil, without which government business will grind to a halt.

The Lacuna in Parliamentary Quorum

The fierce battle over the rejection-acceptance debacle between the majority and minority in parliament ushered in another controversy about the number of legislators that ought to be present to conduct business and consequently take a binding decision that represents the House.

Depending on which side of the House one belongs and the argument one makes. On one hand, members in the minority believe they met the quota to form a quorum to have taken the decision to reject the Budget Statement per their reading and understanding of the standing orders of parliament. Referencing same parliamentary standing orders, the majority, on the other hand, also holds the view that the minority didn’t have the numbers to have taken the decision they took to reject the budget statement.

Confused about arguments coming from both sides of the House, a raucous call, thus, was made by a cross-section of Ghanaians on the Supreme Court to step in to settle the matter on what numbers constitute a quorum and further adjudicate on other flanking issues that may affect the formation of quorum in the Chamber.

On media platforms, lawyers attempted to explain what constituted quorum using decided cases of law; social commentators proffered their understanding on the development; and social media had gone on a hermeneutics frenzy, with interpretations immersed in partisan colours and tainted with half-truths and outright propaganda.

Supreme Court’s Intervention

The obvious cacophony emanating from all sections of the Ghanaian society needed to be whipped into sane silence by a respected authority whose voice on the matter will cause the dust to settle.

As expected by many, the Supreme Court was called upon to adjudicate on the matter and interpret same of what constitute a quorum in parliament to take a binding decision.

The Supreme Court, in a unanimous decision, ruled that at the time the majority sat to reverse the minority’s decision to reject the 2022 budget statement, they, the majority, had the quorum to have taken the decision they took hence their action was not out of place and consistent with the constitution.

A Wednesday, March 23, 2022 article published on GhanaWeb under the headline, Did the Supreme Court rule correctly on the 2022 budget case? by Nii Otu Quaye, a columnist, and he makes the point that:

Regarding the 2022 budget case, Justice Abdulai vs the Attorney General, Writ No. J1/07/2020, dated March 9, 2022, there has been some uproar about why the Supreme Court found quorum from 137 Majority members and the First Deputy Speaker (‘’Deputy Speaker’’) to affirm the Majority’s reversal of the Minority‘s rejection of the budget upon the claim that the latter, though likewise with 137 members and the speaker, lacked a quorum.

Although complexities of incidental jurisprudential and interpretive nuances of the 1992 constitution so convolute the issue as to stir the uproar, a careful study of the constitution and cognate principles of interpretation explicate that the ruling on the quorum was apt, the Minority unlike the Majority, lacked the requisite quorum of half of all the members eligible to vote, 138, because, unlike the Speaker, who the constitution denominates as a non-member and non-voting, the Deputy Speaker is excluded from neither not even when presiding in lieu of the Speaker.

Town Hall Meetings

After the Supreme Court ruling, the government decided, somehow, to engage the citizenry to explain to them the need to accept and embrace the E-Levy. Opinion polls on some media platforms have clearly pointed to a reservation on the part of the citizenry for the levy to be passed into law.

Several town hall meetings were consequently held across the length and breadth of the country to get the buy-in of members of society before the levy is implemented.

E-Levy is Law

After months of public debate on the E-Levy, parliament on Tuesday, March 29, 2022 approved of the levy amidst a walk out by the minority. On Thursday, March 31, 2022, the president of the republic assented to the E-Levy to become law. The Finance Minister has consequently mentioned that the E-Levy will start operation in May. Indeed, the E-Levy has gone through its on ‘rites of passage’ – birth, death and resurrection.

Though the bill has been assented into law, the minority through Hon. Haruna Iddrisu, Minority Leader, and MP for Tamale South, Samuel Okudzeto Ablakwa, MP for North Tongu, and Mahama Ayariga, MP for Bawku Central, has filed a case at the Supreme Court asking the apex court to rule that the decision to approve the E-Levy was unconstitutional since at the time of taking the decision, the majority didn’t form a quorum to have taken a binding decision.

The plaintiffs are seeking the following reliefs:

• A declaration that on the authority of the Supreme Court case of Justice Abdulai v. Attorney-General, Writ No. J1/07/2022 dated 9th March, 2022, the constitutional quorum number for decision-making and voting within the meaning of Article 104(1) of the 1992 Constitution is 138 Members of Parliament out of the 275 Members of Parliament and not 137 Members of Parliament.

• A declaration that on a true and proper interpretation of articles 2(1)(b) and 104(1) of the 1992 Constitution of Ghana, there was no quorum to enable the 137 Members of Parliament of the Majority Caucus present in Parliament on 29th March, 2022 to pass the Electronic Transactions Levy (‘’E-Levy’’).

• A declaration that on a true and proper interpretation of Article 104(1) of the 1992 Constitution of Ghana, the passing of the Electronic Transactions Levy (‘’E-Levy’’) by the 137 Members of Parliament of the Majority Caucus present in Parliament on the 29th March 2022 without the requisite quorum number of 138 Members of Parliament present in Parliament, is null and void and of no legal effect.

• An order of the Honourable Court setting aside the passing of the Electronic Transactions Levy (‘’E-Levy’’) by the 137 Members of Parliament of the Majority Caucus present in Parliament on the 29th March, 2022 as a nullity.

• Any other order(s) the Honourable Court may deem fit.”

It remains unknown yet what the decision of the Supreme Court will be but for now, Ghanaians, unless otherwise decided by the court, must brace themselves up to pay the 1.5% electronic transaction levy starting from May 2022