Finance Minister, Ken Ofori-Atta
In Ghana, both the NDC Members of Parliament and many people, including academics, are huffing and puffing, kicking against the electronic transaction tax (e-levy) as proposed in the 2022 budget by Finance Minister Ken Ofori-Atta (Honourable). They see it as amounting to taxing capital which to them, is abominable, according to the study and practice of finance worldwide.
I shall try to be brief with this publication intended to throw light on the public hullabaloo about the e-levy and the attendant opportunistic capitalization upon it by the populist NDC, in the hope of scoring cheap political points.
I am going to draw on my experience and that of my near, or distant father-in-law, Kodua, in France to educate Ghanaians about what goes on in other jurisdictions.
In the early 1990s in Paris, myself, siblings, another family member, and one artist, Kofi Brown, formed a band in France. Buying the state of the art musical instruments, assembling bandsmen, and spending money on them to practice songs written by the artist for months, if not nearly two years. It cost us money running into excess of then 120 thousand French Franc.
We finally decided to organize a concert. An expensive place was rented around the Metro Republic or Place de la Republique in Paris. Colored entry ticket booklets bearing the picture of the artist were contracted to be printed by a printing press in Paris arrondissement 18 at a very high cost.
Kofi Brown wanted everything expensive and being elected the proprietor of the band, thus a sponsor, without much knowledge about how bands are managed in Europe, I listened to whatever he said and footed the bill.
Before then, we hired one Linda, a female Cameroonian and the younger brother of Manu Dibango of Soul Makossa, to organize publicity for the band. Again, a place was rented for that with invites sent to many people, drinks bought, etc. The instruments were moved to the venue and the bandsmen played. In the end, they could get our previous video clip recorded at La Defense in Paris to appear on two TV stations where we paid for the slots.
Finally, we organized this public concert which unfortunately clashed with a concert by Daddy Lumba on the same day and at the same hours of the evening. Daddy Lumba was playing at Saint-Denis while we were playing at Place de la Republique.
Lest I forget, we had again printed expensive posters and hired a company to post them on walls of venues permissible in Paris.
The posters, tickets, venue and short publicity cost us 39 thousand French Franc which is different from the expenditure already mentioned above. Out of the 39 thousand French Franc, we got only 5 thousand French Franc that night from both the official agency contracted to sell the tickets in advance and those sold at the gate.
Upon incurring a loss of 34 thousand, the French tax department and the organization in charge of paying royalties to musicians in France wrote to me asking me to pay a tax of 5,300 French Franc. I went to their office to tender all documents in evidence of how much I spent on the concert and how much I got, thus the heavy debt I had incurred.
They told me, the tax they were claiming was for the actual tax and royalty payment to the artist. I asked why should I pay a tax knowing the heavy loss I had incurred? They said they would have charged me more if I had broken even or got profit.
I asked them to tell me how much was for the royalty to the artist, deduct that and tell me the actual tax since the royalty to the artist would come back to me. They said by French law I have to pay it to them for them to pass it to the artist after which I could collect it from the artist if I am claiming the band belongs to mine.
I paid the actual tax and refused to pay the component for the artist. They kept chasing me with letters.
Again, there was this father-in-law of mine in Paris. He decided to enter into the self-employment business of delivery, “livraison” in French. When he went to his bank for a loan of 100,000 French Franc to purchase a van for the business, they advised him to first go to the Registry of Commerce, “Registre du Commerce” in French, bring the certificate, before they could grant him the loan.
He went and did as said by the bank. When he took the certificate to the bank, he was refused the loan hence could not start the business. However, a year later, a bill running into thousands of French Franc was sent to him by the tax office as tax he owed on his business.
Despite telling them he could not even start the business because he was not granted the loan to buy the van, they still said he had to pay. He should have come back to tell them immediately following the refusal of the bank to grant him the loan but since he didn’t, by law, he was obliged to pay the demanded tax.
From the above two cases, on what was the French tax office taxing, if not the capital?
Go to France and ask how their tax system works. Could it not be the reason why there are not many job opportunities and job creation in France, unlike in the United Kingdom? In the United Kingdom, there are tax exemptions and any self-employed person running a loss will not be required to pay tax for that year.
In France, I can tell you going by the two cases and others I am privy to that capital is taxed! Therefore, those kicking against the e-levy had better come out with better reasons other than that of “THEY ARE TAXING CAPITAL” but that is not right and does not exist anywhere in the world.