The Electronic Transfer Levy, affectionately called E-Levy has finally arrived. I must be honest to say that I kicked against the 1.75% levy it was initially going to impose on Ghanaians, especially the poor. I even thought it should be replaced and in its place the government should spread the tax net, so that every one who is into any form of business or trade should be mandated to pay taxes.
I went on to suggest that fifty Ghana pesewas a month tax on pure water sellers would be appropriate, while the waakye sellers could pay GH¢10.00 a month as tax. With the tax net spread to cover all who earnmoney, government could lower the tax rates imposed on the thirty per cent out of those eligible to pay taxes, who dutifully pay their taxes. With industries and businesses paying lower taxes, they could expand and employ more people who will also pay taxes on their earnings.
I took a full “U” Turn, on E-Levy and started supporting it after I read about taxations in recent times in this country and asked what the whole fuss is all about.
In the Rawlings NDC era, a new tax of 20% on lottery winnings was introduced. Earlier when one won a one-cedi ticket, he was paid ¢240.00. The new tax which is still implemented, eroded winnings by 20% to ¢200.00. No one complained.
In 1993, the NDC government increased ex-pump prices of fuel by over 60%. No one complained. The, then opposition NPP advised that the tax net could be spread to cover other consumables, and Kwesi Botchwey’s response was that if he increased cost of liquor and people stop drinking, where would he get the money from. He however failed to meet his target as the NPP predicted.
In 2009, toll booth tickets, for SUVs and buses, shot up 400% from 20GHp to GH¢1.00, and no one complained. Commercial drivers found a way of cashing in big time by unrealistically increasing fares to make a big windfall.
In general, financial services are exempted from VAT, however in 2014, the NDC government first introduced 17.5% on all financial services, which was charged on customers’ transactions and not the financial institutions. It was reintroduced in 2015. This meant that if a bankers’ draft for a school fee of GH¢1,000.00 was raised, apart from bank changes, the customer will also pay GH¢175.00 to government.
Today, with the implementation of the E-Levy barely a week old, one of my favourite celebrities, Fella Makafui, went screaming on social media that she was charged GH¢150.00 for a GH¢10,000.00 transaction she made. She asked how small businesses can suffer this.
What would Fella do in the era of the 17.5% VAT on Financial Services, if she was charged GH¢1,750.00? And did we hear ex-president John Mahama saying a new NDC government will repeal the E-Levy Act?
In the NDC’s 2020 People’s Manifesto, the opposition NDC stated in chapter 8.7(c) that when voted back to govern this country, it will introduce a uniform transaction fee policy to guide the electronic payments industry. What exactly does the NDC mean, if it is not another form of E-Levy?
Most likely, the NDC would meet all the financial transfer service providers and come out with an across board rate of 17.5% transaction fees (the 17.5% VAT on financial services, rings a bell here). The service providers could be made to keep 5.0% for themselves which will be above their normal rates, and government will take 12.5%. In 1995 VAT was introduced at 17.5% and it was reintroduced at 12.5%, the figures are familiar and ring bells.
The question is, what will a new NDC government replace the E-Levy with, which will not worsen the plight of the poor Ghanaian?
The demonisation of the E-Levy does not speak well of the NDC, because, comparatively, between the NPP and the NDC, it is the former which charges human faced rates, to ease the pressure on all Ghanaians.
If according to the NDC, 1.50% rate is a killer, what rate will the NDC charge when it comes back to power? Will we see a tax regime of less than that? Will the banks and other financial institutions be made to charge 1% interest or below?
Let us be realistic, what rate do Ghanaians think is acceptable? And if the E-Levy is demonic, what else can be implemented to replace it?
The average Ghanaian goes to church and the pastor talks about tithes, which, we are told, if not paid, the Almighty God will be angry because tithe belongs to Him. Someone earns GH¢1,000.00 a month and pays GH¢100.00 as tithes and goes on to pay weekly offertory of GH¢50.00, making it a monthly total of GH¢200.00.
Then he is told to sow a seed for the Lord and that seed will multiply a thousand-fold. He coughs out GH¢100.00 and in total by the end of the month, GH¢400.00 out of his salary of GH¢1,000.00 goes to the church. 40% gone but the promises of a better life are yet to manifest. 40% is okay to give away but not 1.50% which to some, is just too much.
In the rural communities, the chief would call for developmental project and levy all men, GH¢300.00 each, women, GH¢250.00 and the youth, GH¢200.00 and all indigenes in the diaspora are asked to pay GH¢500.00. Every body will respect that decision and find the money to pay. Fella Makafui’s GH¢150.00, she paid as E-Levy will not be accepted here.The chief’s call, is of a good cause and would be very beneficial to the community and so is the E-Levy.
Some have vowed not to send money to their old folks in the villages via MoMo. All the best, they can board a bus and travel to the village just to give GH¢300.00 to their parents and GH¢100.00 to be shared among the children. Let us not forget something for friends still in the village. In all, a stingy person will spend at least GH¢500.00. What about transportation? From the house to the station and to the village and back will certainly cost more than GH¢7.50.
Back to the question, if E-Levy is demonic, which levy will be ideal for Ghanaians? In any case under the Act, “Electronic Transfer,” is defined as “a transaction carried out electronically on the initiative of the originator, through an institution or a platform to make available an amount of money to a beneficiary.” The levy is charged on transfers only. Transactions such as bank deposits and withdrawals, mobile money Cash-in and Cash-out are excluded from the Levy. (Ref: Ghana Revenue Authority Administrative Guideline on Electronic Transfer Levy.)
In my opinion, Ghanaians must educate themselves on the Electronic Transfer Levy (E-Levy) because it is necessary and moreso a 1.50% tax is not deadly but rather can restore life and developments.
Taxes have never been popular, however, in Ethiopia people willingly go and line up to pay their taxes and they do so with joy and patriotic spirit. If for every GH¢100.00 one gets and he or she gives GH¢1.50 to government for development of this country, Ghana will get there.
Let us all support the course and put to shame all those who have decided to demonise the Electronic Transfer Levy (E-Levy). It has come to stay and we are blessed.
By Hon. Daniel Dugan
