BREAKING NEWS: Minority Leader wants E-Levy to be 1%, up to GHS300 exempted

    Haruna Iddrisu, Minority Leader in Parliament

    The Minority Leader in Ghana’s Parliament, Haruna Iddrisu is calling for the controversial yet to be implemented electronic transaction levy (E-Levy) to be reduced from the propose 1.75% to 1%. 

    He is also calling on government to increase the exemption threshold from GHS100 to GHS300 since the levy is specifically needed for fiscal consolidation.

    The Minority Leader was speaking at the launch of the 10th anniversary of Ghana Chamber of Telecommunications today.

    He believes the GHS300 threshold, instead of GHS100 will prevent financial exclusion because many Ghanaians transact more than GHS100 in a day, of money that may not necessarily be theirs, so it will not be fair to tax them on those moneys.

    Since the Finance Minister announced the new 1.75 per cent E-levy on mobile money and all electronic transactions in the country, there have been huge public outcry against the levy, and the Minority in Parliament swore to reject the entire budget, which they did, particularly because of the E-Levy.

    Indeed, industry groups like the Ghana Chamber of Telecommunications and the eCommerce Association of Ghana have kicked against it as ill-timed and counterproductive to the industry and to government’s own financial inclusion agenda.

    The Minority Leader’s counter proposal on the E-Levy therefore comes as a u-turn on his part, after having led his side to completely reject the budget in a controversial Parliamentary process that seem to have been countered by the Majority side in a one-sided approval of the budget.

    Meanwhile, in announcing the E-Levy to Parliament in his 2022 Budget statement, the Finance Minister said the decision is part of a number of measures to widen the tax net to ensure all Ghanaians paid their fair share of taxes.

    “This new policy comes into effect (once appropriation is passed) from 1st January, 2022,” he said. “Government will work with all industry partners to ensure that their systems and payment platforms are configured to implement the policy.”

    Ken Ofori-Atta noted that the outbreak of the Covid-19 pandemic contributed to the acceleration of digitalization and its usage in Ghana, and that led to over 120 per cent increase in the value of digital transactions in the country as of February 2021, per records from the Central Bank.

    “Total value of transactions for 2020 was estimated to be over GHS500 billion
    compared to GH¢78 billion in 2016 just 5 years ago, while total mobile money
    subscribers and active mobile money users have grown by an average rate of 18% and
    16% respectively between 2016 and 2019,” he said.

    The Minister told Parliament it is becoming clear there exists enormous potential to increase tax revenues by bringing into the tax bracket, transactions that could be best defined as being undertaken in the “informal economy”.

    To that end, he said “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,” he said.

    The Minister however noted that 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 per person) will be exempt from the E-Levy.

    He also said 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.

    Also Read:

    I don’t believe Mobile Money should be taxed – Bawumia

    eCommerce Association kicks against E-Levy

    It would be recalled that last year, Minister of Communications, Ursula Owusu-Ekuful started pushing the agenda for service charges on mobile money to be taxed, but the Finance Minister and the Vice President, Dr. Mahamudu Bawumia spiked the idea saying it will eventually burden consumers and derail the digital Ghana agenda.

    But one year on, government has found it prudent to now place a direct service tax on the consumers it sought to protect not long ago.

    It is still not clear how the 1.75% e-levy will be implemented. Already there is a 1% service fee on all mobile money and several other electronic transactions. The question still remains whether the 1.75% will be an addition to make the fee 2.75% or it will be calculated on the just the 1% fee.


    Please enter your comment!
    Please enter your name here