The Danquah Institute (DI) has recommended that the government suspend the Electronic Transactions Levy (E-Levy) in order to allow for more extensive discussions in order to mould the policy into something more comprehensive and acceptable.
It said the introduction of the levy to widen the tax net and rope in the informal sector was a highly commendable initiative; however, in its current form, it risked pushing people to engage more in cash transactions.
The Executive Director of the DI, Dr. Antoinette Tsiboe-Darko at a press conference noted that lessons from other African countries that attempted to or introduced such levies were far from encouraging, as patronage of mobile money transactions fell drastically when the idea of taxing was mooted.
For instance, in Tanzania, she said, the evidence suggested that the idea to tax mobile money transactions did not go well in terms of revenue generation, with a similar situation occurring in Kenya.
“We recommend that the government hold broad-based consultations with the myriad of stakeholders to make the levy acceptable to the populace,” Dr Tsiboe-Darko said.
She recounted that when the Value Added Tax (VAT) on financial services was first introduced, it took the government over two years to do consultations before coming up with an indicative list of fees based on financial services.
The extensive consultation, she said, led to the successful reintroduction and implementation of the tax.
The executive director commended the government for making the levy pro-poor.
She, however, suggested that further prospective taxpayers could be categorised into four groups, with each being made to pay a different percentage in accordance with the amount transacted.
“For instance, level one pays a certain percentage for those whose daily transaction ranges from above GH¢100 to GH¢300; level two pays a higher percentage on transactions from GH¢300 to GH¢500 a day; level three again pays a higher percentage on another quantum, and so on,” Dr Tsiboe-Darko suggested.
She, however, urged Ghanaians to support the 2022 budget, as it was an opportune moment to disentangle the economy from aid dependence.
