Job losses, high cost of living, long queues at banks are some negative implications of E-Levy
On November 17, 2021, Finance Minister, Ken Ofori-Atta, during the 2022 budget reading in parliament, announced the introduction of 1.75% tax on all electronic transactions.
According to him, this new directive forms part of strategies to widen the country’s tax net.
He added that the 1.75% tax is also to enhance financial inclusion and protect the vulnerable in the country.
According to Ken Ofori-Atta, monies accrued from E-Levy will be used to create jobs and grow the private sector to employ more of the teeming unemployed youth in the country.
Government is likely to rake in about GH¢500m a month from the newly introduced e-transactions levy.
In a year, a total of GH¢9 billion would be generated from the new directive.
However, there's been several controversies about the E-Levy since its introduction.
Ken Ofori-Atta pulled out the E-Levy from parliament and is expected to re-lay it before the House on February 15.
But currently, the E-Levy has been reviewed downwards to 1.5% from 1.75%.
Here are some inconveniences E-Levy is likely to cause if the bill is passed.
Job losses/ Collapse of businesses (MoMo)
When the government implements E-Levy, its been projected that several Mobile Money (MoMo) agents will lose their jobs because most customers will withdraw their monies from their wallets to escape the charges (E-Levy).
Already, data published by the Bank of Ghana (BoG) has revealed that the value of mobile money transactions has dropped by GH¢3.2 billion in December last year, less the one month after Finance Minister, Ken Ofori-Atta, announced in the 2022 budget of an electronic transfer levy (E-Levy).
Businesses will not be brisk as usual as most people will prefer saving their monies in piggy boxes, susu boxes and under pillows. This, according to financial experts, defeats government's digitilization agenda.
Long queues
When the E-Levy is passed, customers will choose to go to the banks for transactions than using their ATM cards. This would lead to long queues at various financial institutions since face to face banking services is tax-free.
Increase in Crime
Since Ghanaians are likely to carry cash around, there's a high risk of them being attacked by criminals.
Over the years, some traders have been attacked on highways while travelling to other regions to get goods.
They then resorted to the use of MoMo to go cashless, as well as, safeguard the snatching of their earnings from highway criminals.
Overburdening of Ghanaians
The implementation of E-levy will top up the burdens of Ghanaians as it adds up to the numerous taxes citizens are already paying, from Communication Service Tax, Value Added Tax (VAT), Income tax, petroleum tax, among others. According to some citizens, they hardly see the benefits of these already existing taxes.
This would make life more difficult for Ghanaians as most of them struggle to make earns meet for themselves.
Inflation/ high cost of living
Already, some Ghanaians have complained about the high cost of living in the country. Prices of goods on the market have shot up.
The extra charges on all electronic transactions will affect the cost of goods and services. This is because businesses would have to factor in the cost to make profit.
Meanwhile, government through the information ministry is organising town hall meetings to discuss the Electronic Transaction levy (E-Levy).
The exercise will also give government feedback on reactions from citizens on the proposed levy and how best to implement it.
Finance Minister, Ken Ofori-Atta, has also warned of dire consequences for the Ghanaian economy if the E-Levy is not passed.
He urged Ghanaians to support the implementation of the E-Levy.
Finance Minister, Ken Ofori-Atta