The twice defeated leader of the largest opposition political party in Ghana, National Democratic Congress (NDC), Mr. John Dramani Mahama, has announced that the Electronic Transfer Levy Act, also known as E-Levy, would be repealed if Ghanaians vote for NDC in 2024.
Though he lost the 2016 presidential election as a sitting President and the 2020 as a former President, it is evidently clear that he would vie to lead the party he sent to opposition again for the next general elections.
Delivering a lecture in Accra on Monday, this week, on the theme, “Ghana at a crossroad,” Mr. Mahama described E-levy as a regressive tax. He had stated earlier that, governments since the 4th Republic had all invested in digital infrastructure in order to modernize the economy, but failed to state if it was right to have returns on such investments.
According to him, mobile money payments were used for remittances to parents in the villages, used in the markets and supermarkets to pay for groceries purchased, among others.
He also mentioned that internet and electronic banking have made it easier to move money from an account to another without cheques or cash transfers, touting same as a positive development for the economy.
“Unfortunately, in the face of this self-inflicted economic catastrophe, this government against all sound advice has decided to introduce the E-Levy, a regressive tax that heaps more suffering on Ghanaians.”
“A new National Democratic Congress Government, God willing and with the votes of the sovereign people of Ghana – in 2025 – will repeal the E-Levy Act,” he assured and the crowd applauded him.
To the NDC and Mahama, the Akufo-Addo government has failed to demonstrate prudence in public financial management, thereby, remains fixated on taxing its way out of economic mismanagement.
Why E-levy
The Ghana Cares (Obaatanpa) Programme, introduced by the government, targets a tax to GDP ratio of 20% by 2024.
The government has also set a target to reduce the budget deficit from an estimated 9.4% in 2021 to below 5%, in line with the Fiscal Responsibility Act, 2018 (Act 982).
The Ghana Revenue Authority’s (GRA) data indicates that, as at August 2021, 2.4 million individuals (approximately 8% of the total population) were registered as personal income taxpayers; 45,109 entities were registered as corporate taxpayers; and 54,364 persons were registered as self-employed taxpayers.
However, the government noticed the growing nature of digital payments and devised means to mobilize revenue from the sector.
According to the GRA, between 2017 and 2021, mobile money transactions in Ghana increased from one hundred and fifty-five billion Ghana Cedis to nine hundred and eighty-six billion Ghana Cedis.
The GRA observed that the shift from traditional to digital payments systems has supported growth in e-commerce, social media shopping and the use of digital payments, but lamented that these were largely untaxed, and while the industry grows, several government tax revenue sources such as VAT were experiencing a decline in growth.
BoG Report
In March last year, the Bank of Ghana published that Ghana’s total value of mobile money transactions, shot up from USD5 billion per month in February 2020 to USD11.5 billion per month in February 2021.
This was contained in a circular titled “A Summary of Economic and Financial Data,” which statement also announced that active mobile money accounts increased from 14.7 million in February 2020 to 17.5 million in February 2021, with a significant rise in the number of active mobile money agents from 235,000 to 465,000.
The Akufo-Addo government says considering the growth of the sector, it was prudent for a government to mobilize some revenue for development, thus the E-levy, while expanding the tax base.
