The government’s proposal to levy a 1.75 percent tax on most electronic transactions is a poor strategy for broadening the tax base.
The E-levy, which was included in the Finance Minister’s 2022 Budget statement submitted to Parliament on December 17, has become a contentious subject in Parliament, dividing the Majority and Minority parties.
A number of analysts have slammed the levy as being too high for a start or too punitive relative to its scope, the latest to join that school of thought is Sulemana Braimah, Executive Director of the Media Foundation for West Africa, MFWA.
“E-levy is the most incompetent, lazy, brute and crude way of seeking to widen the tax net,” he posted in a December 14, 2021 tweet.
Braimah joins the likes of legal practitioner Martin Kpebu and musician cum radio presenter Blakk Rasta who are on record as tagging the move as lazy.
- We’ve made “good progress” on e-levy consultations, Deputy Finance Minister
- After Haruna Iddrisu’s absolute rejection of the E-levy, NDC MPs and officials rallied behind him.
The Finance Minister, in contrast to their position, has praised the fee as a great step forward in pooling resources to advance government business.
What Ofori-Atta said about 1.75% levy on electronic transactions
Ken Ofori-Atta introduced a new 1.75% levy on all electronic transactions such as Mobile money transactions, remittances and other electronic transactions.
Fees and charges of government services have also been increased by 15%.
The Finance Minister explained, “It is becoming clear there exists an enormous potential to increase tax revenues by bringing into the tax bracket, transactions that could be best defined as being undertaken in the informal economy.
“As such government is charging an applicable rate of 1.75% on all electronic transactions covering mobile money payments, bank transfers, merchant payments, and inward remittances, which shall be borne by the sender except inward remittances, which will be borne by the recipient.
“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 ¢3000 per month, will be exempt from this levy,” Ofori-Atta revealed.
