The e-levy is a good thing and must be supported

I am a Ghanaian Diasporan who has followed the debate on the Ghana government’s proposed e-levy with keen interest. As I have listened to the views on both sides, I have wondered why there is such a high opposition against the levy when already some 26 countries in Africa and beyond, including Zimbabwe where I now operate from, have e-levies in their systems. And the levies have worked for them! Shouldn’t good examples be followed?

In all these 26 countries, the goal has been the same: to widen the tax net to cover the vast majority of the population who operate in the informal sector and thus pay no or very little tax. It is also to help the governments to raise a lot more money for national development.

In the case of Zimbabwe, concerns and fears similar to what are being expressed in Ghana, were voiced out at the time the levy was introduced in October 2018. In fact, the fears led to a sudden panic buying nationwide.All hell broke loose afterwards, leading to a severe economic downturn.

But in the end, the e-levy proved to be a progressive tax, and so far it has injected a lot more money into government coffers and has helped the countryto pay even some of its foreign debts.

Zimbabwe is still under Western economic sanctions unjustly imposed some 22 years ago because of President Robert Mugabe’s land reform programme that took land from white farmers and distributed it to land-hungry black people. But for the e-levy, nobody knows what would have happened to government finances.

For the sake of comparison, Zimbabwe’s e-levy is fixed at 2% while Ghana is proposing a 1.75% levy, which, interestingly, has led to blows thrown in Parliament, a spectacle unbefitting the august house of our dear motherland.

Also, in Zimbabwe, the e-levy kicks in at US$10 of every e-transaction. In Ghana, the threshold is set at Ghc100, which converts to roughly US$17.Socontext should be brought to Ghana’s debate.

I see that the argument against Ghana’s e-levy has focused on the issue of the government having already imposed too many taxes in the past and the public not having seen the fruits of those taxes by way of real national development. This suggests that there is not much transparency and accountability on the government’s side as to what the too-many-taxes have been used for.

If this is the case, a foolproof method of transparency and accountability should be established by the government to assure the restive opponents of the e-levy that this time around the revenue collected through the e-levy will actually benefit the country. There must be regular publications of how much has been collected and what use the levy has been putto, or proposed to be put to.

But there is no virtue in the suggestion that because the public has not seen the fruits of the existing taxes, the e-levy should be scrapped. This will be tantamount to throwing the baby away with the bathwater.

In other countries, the e-levy has been a progressive tax as already alluded to – progressive in the sense that it has helped widen the tax net. We in Africa are used to enjoying the fruits of national development without wanting to pay for them.So we leave our tax burden on a tiny minority who work in the formal sector. By that way, our governments are not able to raise enough revenue for development, leaving us open to the abuse of bad conditionalities attached to foreign loans.

But for how long can we run our countries on foreign loans?  Remarkably, in the countries that give us those foreign loans, the tax net is so wide that most people pay taxes. That is how they are able to raise enough revenue and give us partas loans.

In Ghana’s case, there are millions and millions of citizens who pay no or very little tax. The e-levy will bring in these many millions of our citizens who pay no taxes to support the country’s development.This is our only country and we must all help to develop it by paying taxes.

To me, therefore, the e-levy is a good thing and must be supported. It has helped other countries to straighten out their finances. It will help Ghana too.

At the same time, we must ensure that the government uses the expected increased revenue from the e-levy wisely and for the right purposes.Even better, the government must assure the public via a guaranteed method of transparency and accountability that will show how much has been collected and what it has been used for.

But to throw the baby away with the bathwater is not a good policy for Ghana. The 26 countries that already have e-levies have benefited immensely from them. Zimbabwe has been a particularly good example. With Western economic sanctions still in place, Zimbabwe would have suffered greatly without the e-levy. There is no shame for Ghana to follow and adopt some of these good examples. Let’s get our own e-levy.

By Baffour Ankomah, Editor at Large, New African magazine, London

The views expressed in this article are the author’s own and do not necessarily reflect The Chronicle’s stance.


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