Business News Mon, 29 Nov 2021

E-levy problematic, Ghana can generate US$4.3 billion from oil and mining sector – Duffuor

Government introduces a 1.75% tax on all electronic transactions

E-levy to widen country's tax net, Ofori-Atta

E-levy will destroy Ghana's digitalization agenda, Kwabena Duffour

Former Finance Minister, Dr Kwabena Duffuor, has suggested ways government can rope in revenue to widen the country’s tax net instead of resorting to the e-levy.

He furthered that the implementation of the 1.75% levy on all electronic transactions would be fraught with several challenges which will, in turn, affect the country’s digitalization agenda.

According to Dr Kwabena Duffuor, Ghana can rake in a total of $4.3 billion a year from the extractive sector, oil and mining, if government focuses on that sector.

Delivering a public lecture in Accra on Monday, November 29, 2021, the former finance minister said, “Indeed there is an urgent need of a budgetary room that will allow government provide the needed resources for public investment without undermining the already weak fiscal situation. And it was for this reason that government in the 2022 Budget decided to widen the tax net by imposing the ‘Electronic Transaction Levy’ or ‘E-Levy’ of 1.75% on electronic transactions covering ‘mobile money payments, bank transfers, merchant payments, and inward remittances” to be borne by the sender, except inward remittance, which would be borne by the recipient’.

“It should, however, be noted that taxes/levies are imposed on incomes/gifts, consumption, and held properties or assets. Electronic transfers/payments are none of these. An electronic transfer usually represents a mode of payment or settlement. And indeed, modes of payment should not attract taxes/levies. This is because taxing modes of payment could lead to instantaneous double taxation, since the underlying income, commodity would have normally been taxed already. This makes the proposed E-Levy problematic because it could be fraught with serious implementation challenges. This tax could undermine the Ghanaian Digital Economy," he added.

“The IFS would like to remind government that there is so much additional revenue that can be generated from the extractive sector, which is currently left in the hands of private investors who extract publicly endowed resources in the sector. Our estimates show that by adopting the same approach that Ghana’s peers use to generate revenue from their extractive sector (oil and mining subsectors), Ghana can generate additional US$4.3 billion from the sector yearly. Currently, this amount is equivalent to more than GH€25 billion. This lost revenue clearly dwarfs the GH 6.9 billion in revenue that the proposed E-Levy is projected to fetch the country in 2022,” he pointed out.

Finance Minister, Ken Ofori-Atta, on November 17, 2021, announced the introduction of 1.75% tax on all electronic transactions during the 2022 budget reading.

According to him, this new directive forms part of strategies to widen the country’s tax net.

He added that the 1.75% tax is also to enhance financial inclusion and protect the vulnerable in the country.

Though this e-levy has received public backlash, the Finance Minister has said government will find a way to win the cooperation of the Minority in parliament to accept the e-levy.

Source: www.ghanaweb.com
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