'Scrap E-Levy, you cannot tax your way out of poverty' - Economist to government

Professor Godfred Bokpin, a Financial Economist at the University of Ghana (UG) has asked the government to scrap the controversial Electronic Transfer Levy (E-Levy), describing it as "conceptually wrong".

The ruling administration introduced E-Levy in May 2022 imposing a levy of 1.5% on electronic transfers.

The levy was "to enhance domestic tax mobilization and expand the tax base and provide an opportunity for everyone to contribute towards national development".

The initial rate proposed by the government was 1.75% but it was revised downward to 1.5% after strong opposition.

The levy has however not generated the expected results as some who are still against it find ways of dodging its payment.

Revision in budget

Subsequently, the government in its 2023 budget statement disclosed the rate has been revised again from 1.5% to 1%.

This, according to the government, will allow more Ghanaians to use the service.

“Review the E-Levy Act and more specifically, reduce the headline rate from 1.5% to 1% of the transaction value as well as removal of the daily threshold,” Finance Minister, Ken Ofori-Atta said.

Meanwhile, the GH¢100 threshold has been removed.

Taxation is not a hammer

Prof Bokpin speaking to this in an interview on Peace FM's morning show 'Kokrokoo' said when a policy is "conceptually wrong" it will be opposed no matter how it is revised.

"Government should delete it (E-Levy). When something is conceptually wrong and it doesn’t meet certain basic principles of taxation, people have issues with it; even if it's 0.1% . . . CSOs, Private sector said all that they could say about e-levy but sometimes it is as though somebody wants to do it to demonstrate where power lies," he intimated.

He further stated that when your policy announcement aligns with the expectation of the market, they pick on it and confidence is generated.

"Taxation is not a hammer where you treat everybody else in the market as a nail . . . you cannot tax your way out of poverty; it’s never done anywhere . . . " he added.