E-levy charges begin on Sunday. This is the reason some Ghanaians are about to suffer from it

30th April, 2022

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In 2020, the Covid-19 pandemic disrupted the Ghanaian government’s tax forecasts. The various social actions undertaken by the government have greatly increased the public debt. For 2022, the authorities have decided to take advantage of the dynamism of e-payment to increase its revenue.

The Government of the Republic of Ghana now imposes a 1.75% tax on electronic financial transactions. Finance Minister Ken Ofori Atta (photo) announced this on Wednesday, November 17, during the presentation of the budget for the year 2022. He specified that the levy concerns all electronic transactions, Mobile Money, bank transfers and other remittances, and merchant payments.

“After long deliberations, the government has decided to impose a tax on all electronic transactions to widen the tax net and reach the informal sector. This will be known as ‘electronic transaction levy or electronic levy’,” said Ken Ofori Atta. The tax will officially take effect on Sunday 1st May, 2022. It will be borne by the sender, except for incoming remittances, which will be borne by the recipient.

In an interview with ghanaweb.com, Charles Adu, national public relations officer for the Association of Mobile Money Agents, lamented the levy, which he said would “derail efforts to transform the economy of Ghana into a cashless society”.

Reason why the idea of e-Levy was considered, and why some Ghanaians are about to suffer from it:

During the Covid-19 crisis, the Ghanaian government adopted several budgetary policies to relieve the population. This led to an increase in total public debt and a sharp drop in revenue collection last year. Total income in 2020 decreased by 11.93 billion cedis ($1.9 billion), equivalent to 3.1% of gross domestic product (GDP), while total expenditure increased by 14.08 billion cedis equivalent to 3.7% of GDP. As a result, the country recorded a budget deficit of 11.7% of GDP against a target of 4.7% of GDP.

The pandemic, combined with the government’s efforts since 2018 to generalize digital payment, reduce dependence on physical money which has costs, facilitate financial transactions, support the digital economy, has on the other hand increased the volume of electronic transactions. The total value of transactions for 2020 was estimated at more than 500 billion cedis against 78 billion cedis in 2016. The Ghanaian government sees this as a way to bail out public coffers.

According to Ken Ofori Atta, the money collected will be used, among other things, to support entrepreneurship, youth employment, cyber security, digital technology and the development of road infrastructure.

Regrets

Over the weeks, most Ghanaians have expressed their regrets in this government after the e-levy bill was passed. They claim government is only finding ways and means to gather resources from the people, without using them as expected.

Over the years, different forms of taxes/levies have been passed by law yet, the situation of the country keeps worsening almost every week. This has created some form of doubt in the minds of most Ghanaians, since resources are always misused.

See below Momo charges with E-Levy

Most momo users complained about the charges which were associated with sending and cashing out of money from their accounts. Most people expected that reductions could be made to improve upon the transactions made everyday, so everyone could make smooth transactions (considering both the rich and the poor).

However, after e-levy has been introduced, it is expected that total amount of transactions made in a day could reduce drastically, considering the charges associated before and after the e-levy.

Is this how to build up the best digital economy?

Is this the best way to go?

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