E-Levy: Taxing the poor to salvage ailing economy problematic – Prof. Eric Abayie

On November 19, 2021, Ghana’s finance minister., Ken Ofori-Atta, announced that the government intends to introduce an Electronic Transaction Levy (E-Levy) in the 2022 budget.

He said this was to “widen the tax net and rope in the informal sector”

A section of the Ghanaian people have raised concerns over the payment, citing the current economic hardship in the country.

Adding his voice to the debate, an Associate Professor of Economics at the Kwame Nkrumah University of Science and Technology (KNUST), Professor Eric Fosu-Oteng Abayie, has advised the government to find other avenues to revive the economy other than taxing the poor.

According to him, there are homegrown solutions to the economic challenges rather than taxing which further marginalizes the poor.

"The Deputy finance minister, John Kumah, Dan Botwe, and the world bank admits that the country is faced with economic challenges. Yes, you can take taxes but certainly not from the poor. there are homegrown solutions to this challenge; an example is the One District, One Factory, and engaging the rich and businessmen in the country to invest.

The President, Nana Akufo-Addo has said before that there’s money in the country, indeed there is, but how to use that money judiciously is the problem. Just a hand full of people pay taxes in this country. We need to apply the principles of taxation(ie) domestic resource mobilization and expenditure rationalization. Recently the President was in Dubai to court investors in the country, those are the solutions we need.”

He further admonished Ghanaians to be patient and tighten their belt, adding that Ghana is not the only country faced with economic challenges.

"The current global economic challenges, taking into consideration Covid-19, Russia-Ukraine war and others bestow on us as citizens to tighten our belts”, he stressed.

Prof. Abayie made these statements on Pure Morning Drive, hosted by Kwame Adinkra on Wednesday, March 9, 2022.

The proposed levy, if passed by Parliament will charge 1.5% of the value of electronic transactions. It covers mobile money payments, bank transfers, merchant payments, and inward remittances. The originator of the transactions will bear the charge except for inward remittances, which will be borne by the recipient. There is an exemption for transactions up to GH¢100 ($16) per day.