Mr. President, I implore you to scrap the E-Levy

Besides, the government needs to find ways to rope in more taxpayers. However, electronic transaction levy or E-Levy is not the right source to raise revenue. E-levy is counterproductive and a regressive tax. Here is a country trying to go cashless, and digital.

Instead of getting the telcos to reduce the transaction costs the citizens incur, the government is bent on introducing more cost to deter people from continuing to use mobile money and other e-transactions.

Instead of effectively monitoring the telcos to ascertain exactly how much they are raking in from momo transactions, and taxing them (Telcos) accordingly, the government is going to increase the burden on citizens, through E-Levy.

Currently, for instance, when you send GHC 2000 to your ward for tuition fees, this is what you’re charged;

When you send Ghc 2000, your ward is charged GhC 10 to withdraw it, so if you want him or her to receive Ghc 2000, you have to send GHC 2010. You’re charged GHC 10 for sending the GHC 2010. So for your ward to receive GhC 2000 net, it costs you GhC 20 i.e., (GHC 10 for sending+Ghc10 to withdraw).

Once the e-levy comes into force, your cost will be as follows: For your ward to receive Ghc 2000, it will cost you Ghc 55.18, i.e., (GHC 2010x1.75%=GHC35.175+GHC 10 for sending+ GHC 10 to withdraw). Instead of paying GHC 20, you’ll pay GHC. 55.18, it will cost you an extra GHC 35.18 (E-Levy).

Even the so-called exemption of up to GHC 100 is problematic. Imagine sending GhC100 to your ward, if you want him or her to receive GHC 100, you have to add GHC 1, the withdrawal charge of 1%. So you have to send Ghc101. Once you send GHC 101, the Telcos will charge you 1% of Ghc101= GhC.1.01+ (e-levy of 1.75% of GHC101=Ghc 1.77). Your total cost for sending GHC100 to your ward will be, GHC1 +1.77 e-levy= GHC 2.77.

Recommendations:

It’s necessary for the government to mobilise domestic resources to raise revenue, however, e-Levy is counter-productive to the country’s efforts to make the economy cashless and digitalization.

1. The government ought to closely monitor how much transaction charges the Telcos are raking in, and make sure they (Telcos) pay proper corporate income tax.

2. If the government still wants to get more revenue from mobile money transactions, it can negotiate with the telcos to relinquish the 1% and or the Ghc 10 they charge for sending momo. Vodafone currently doesn’t charge anything to send money on their network. This implies that it’s possible for the telcos to do without this charge.

Ghanaians are used to paying to send money, so they will understand. Though some of us using Vodafone are enjoying that break Vodafone is graciously giving us, we will understand and start paying the charge again, to the government.

3. Other Sources of Revenue: The Auditor General’s reports over the years reveal massive graft and waste of billions of cedis that the country is losing. Measures must be put in place to prosecute culprits, recover the stolen money, and also plug the channels of the graft and waste.

4. Extractive Sector: The government must turn to the extractive sector for what is rightly due the nation. On May 8, 2018, the Vice President, Dr. Bawumia was on TV and Twitter saying that “ I made the point that the Government of Ghana’s “Carry interest” in mining operations, usually 10%, is “virtually useless” and has yielded zero dividends for government for years, depriving the people of Ghana of considerable amounts of domestic revenue.”

If this meagre 10% carry interest is changed from dividend to 10% of production, and the government makes sure of the exact quantities of minerals produced, the mining companies cannot outwit the government through transfer pricing and other schemes.

The government should renegotiate the mining arrangements for higher than the insulting 10% carry interest. Is it not insane for someone to come and control your resources, give you a meagre 10%, and at the end year decide through the board of directors if you can have a portion of the profits?

When they declare losses you don’t get anything. For years the mining companies have been declaring losses but still in business. Hello!! Wake up Ghana! That’s what Vice President Dr. Bawumia was lamenting about.

Mining is one of the major sources of domestic revenue. What has the government done about what the Vice President has lamented about? When President Nana Addo said in opposition that “Yete sika so nso ekom de yen,” to wit, “we are sitting on money but we are hungry.” What was he referring to? Where is the “sika” that we are sitting on? In our bank accounts, mobile money wallets, or remittances? Please, the ruling elites of this country must get serious.

5. I understand that the government intends to rope in more taxpayers, especially, those operating in the informal economy. However, e-levy is not the solution. E-levy penalizes the few who are already paying taxes.

Imagine you deposit your disposable income in your bank account, and when you transfer it to your mobile money wallet or to another person, the income that was taxed before you deposited it is taxed again. That’s double taxation.

6. Government ought to reassess tax exemptions to corporations. I understand that tax exemption is a means to attract direct foreign investments. However, it should be properly assessed and abolished or reduce the grace period to the first year, and graduated tax increment.

For example, a company comes in and gets the first year of operation tax-free, the following year 10%, the next 15%, and within five years reach the normal corporate tax in the country.

The government should find a way to properly identify those operating in the informal economy, and tax them accordingly. It will not be an easy task but can be done. It must start from somewhere, and gradually rope in those not paying income tax. One group at a time.

A) Take importers, for example, the GRA knows the volumes of goods individual traders bring into the country, they can use those figures to extrapolate their revenues and incomes tax.

B)Artisans: Introduce tax credit or rebates for homeowners. When homeowners property taxes are assessed, they could be allowed to deduct some renovation or building expenses by providing “verifiable receipts” from artisans they contracted. If homeowners know that with proper receipts they can get tax credits, they will demand receipts.

Artisans too could be mandated to register their businesses and renew their business licenses every two years or so. They must provide receipts to their clients. They could also be mandated to file their taxes every year.

Gradually, it can extend to markets, through education. The Ghc 1 or Ghc2 the market women and hawkers are paying to the local government could be increased after ample education.

The government should aim at getting every eligible person to file tax returns whether they have income or not, as pertains in other jurisdictions. Tax education must start from Junior Secondary level.

Expenditure of the Executive:

The government must be thrifty. The extravagant lifestyle of government appointees and politicians must stop. The fleet of expensive vehicles, long convoys of gas-guzzling V8s, and frequent foreign travels at the taxpayers’ expense must be curtailed.

A country that depends on donor support, and squeezing its people for domestic revenue through high fuel prices and multiple levies, must be modest. The leaders must lead by example. You cannot ask the people to tighten their belts whiles you don’t even have a belt hole, so to speak.

Government communicators trying hard to make the e-levy seem a panacea to all the government's financial struggles, must stop telling us what the E-Levy will be used for, and acting as if this country will fall apart without the E-Levy. Some of their utterances are irritating and insulting.

Conclusion:

The government ought to listen to the voices against the e-levy and withdraw it. It will be counterproductive, and inimical to promote digitalization and a cashless economy.

Considering the impact of the e-levy, the government “predicts that 24 percent of users will drop off within the first couple of months but users will eventually go back to using digital services because the benefits outweigh the negatives.”

However, comparing E-Levy experience elsewhere, the United Nations Capital Development Fund- UNCDF conducted a survey on the impact of mobile money tax in Uganda and found that 38 percent of respondents used mobile money less after introducing the tax.

Low-income users were unduly affected by the withdrawal tax, compared to higher-income groups.

About 57.4 percent of high-income respondents started using agent banking as a direct result of the tax, compared to 11.1 percent of low-income respondents who could not better access alternatives where similar tax is not applied. Overall, there was a drastic decrease in transaction value by over 50 percent after the tax was introduced, where higher income users more likely to engage in higher-value transactions migrated away from mobile money.”

The government seems to have underestimated the negative impact of the e-levy. It would most likely not achieve its intended purpose. The government would be well advised to drop the e-levy and find better ways of mobilizing domestic revenue and roping in more taxpayers.

It will be politically advantageous for the government to drop the e-levy, and rigorously pursue the culprits of stolen money in just the 2021 Auditor General’s report, if not 2017 to 2021. This would let Ghanaians believe that the Akufo Addo government means business when he said that he’ll fight corruption, and “protect the public purse.”

As a matter of urgency, the meagre 10% carry interest in mining operations in Ghana should be increased and change from dividends to percentage of production.

The government should make sure of the exact quantities of minerals produced.

Isn’t it a shame that a country so endowed with oil and mineral resources would even think of a regressive tax like E-Levy?

The “Yete sika so nso ekom de yen” phenomenon should end under President Nana Akufo Addo. Your Ghana Beyond Aid agenda, if you would ever achieve that must be realized through our God-given natural resources. Mr. President, let it be your legacy.

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