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Wednesday, December 8, 2021

Reconsider the e-levy; it’s unfair

A Fiscal Policy Analyst with Oxfam, Dr. Alex Ampaabeng, has appealed to the Ministry of Finance to reconsider its e-levy proposal.

The Finance Minister, Ken Ofori-Atta delivering the 2022 budget statement and economic policy, announced the abolition of road tolls and the introduction of a new levy dubbed ‘e-levy’ which will be deducted from all electronic transactions.

“Government has abolished all tolls on public roads and bridges. This takes effect immediately the Budget is approved.”

“After considerable deliberations, Government has decided to place a levy on all electronic transactions to widen the tax net and rope in the informal sector. This shall be known as the ‘Electronic Transaction Levy or E-Levy.’ Electronic transactions covering mobile money payments, bank transfers, merchant payments and inward remittances will be charged at an applicable rate of 1.75%, which shall be borne by the sender except inward remittances, which will be borne by the recipient”.

“Mr. Speaker, 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 GH¢3000 per month) will be exempt from this levy. A portion of the proceeds from the E-Levy will be used to support entrepreneurship, youth employment, cyber security, digital and road infrastructure among others. 3y3 Baako, Ye nyinaa bey tua. Mr. Speaker, this new policy also comes into effect (once appropriation is passed) from 1st January, 2022. Government will work with all industry partners to ensure that their systems and payment platforms are configured to implement the policy,” Ken Ofori-Atta said.

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Responding to the issue on Peace FM’s ‘Kokrokoo’ Tuesday morning, Dr. Alex Ampaabeng opined that, per his calculation, the e-levy will be unfair if it is to be played out to all parties who transact electronic business.

He, imagining a person who withdraws 1,000 cedis and another 3,000 cedis a month but are both charged the same rate, noted the implementation of this e-levy policy will breed inequity.

He advised the Ministry to engage in key stakeholder consultations before implementing the policy and also called for a reduction of the 1.75% e-levy.

“Even if we will implement this policy, certain aspects have to be critically looked at. [1] Is the amount to be charged at the end of the month or when exceed or charging on pay as you go basis . . . which will not be fair. Because the scenario I gave is that the person who did 1,000 at one go, at the end of the month, has done only 1,000 but the one who did 100, 100, 100; at the end of the month, has done 3,000. Tax is all about fairness. So, when you charge a person who did 1,000 on the go and didn’t continue the transaction 1.75 and charge another who did 100, 100, 100 to make 3,000 a month but don’t charge him/her; at the end of the day, is there fairness in the system?”

However, for the policy to be effective, Mr. Ampaabeng proposed; ”All this will be successful only if we drag most people from the informal sector…”

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