Fiscal Policy Specialist at Oxfam, Dr. Alex Ampaabeng, is unhappy with the government following the introduction of the Electronic Transaction Levy.
He says the rollout of the tax and its planned mode of implementation is “regressive and counterproductive” to the government’s own digitalization drive.
The government, as part of strategies to widen the country’s tax net, has announced an Electronic Transaction Levy.
It will be a 1.75 percent charge on all electronic transactions including MoMo.
Speaking in a post-budget analysis however, Dr. Ampaabeng was of the view that, the tax is meant to simply bring untold hardship on Ghanaians.
“I am a bit disappointed compared to what I was expecting in the fiscal policy, especially on the tax side. One particular tax is very surprising; the electronic tax. I really think this is going to be very regressive and counterproductive to the digitization agenda and encourage a cash-based society other than cashless one – we are going to suffer.”
“There are commodities that we buy that have VAT components already, and if you pay via MoMo, there is the levy. It is really confusing, and I think that the poor will suffer the most. This is more than a quadruple rather than say double taxation”, he fumed.
The E-tax, according to the Finance Minister, Ken Ofori-Atta, is to enhance financial inclusion and protect the vulnerable.
Transactions covering mobile money payments, bank transfers, merchant payments, and inward remittances will have the levy imposed on them and will be borne by the sender.
“After considerable deliberations, the 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”, Ken Ofori-Atta said on Wednesday, during the presentation of the 2020 Budget in parliament.
However, the levy will be waived for transactions that amount to GHS 100 or less in a day or approximately GHS 3,000 per month.
The government says portions of revenue collected from the levy will be used to support entrepreneurship, youth employment, cybersecurity, digital, and road infrastructure among others.
It is the expectation of the government, that the implementation of new policy will come into force effective January 1, 2022, if the appropriation is passed.
