By Patrick Biddah
The former Minister of Finance, Seth Terkper, renews his call for the elimination of the Electronic Levy (E-Levy), asserting that this and other levies, are distorting the essence of revenue mobilization.
Speaking at a media dialogue on Ghana’s IMF programme on February 28, 2024, Terkper, criticized the E-Levy and emphasized that its removal is crucial.
In a coincidental turn of events, political parties are promising to scrap the E-Levy after the 2024 general elections.
Charles Addae, Assistant Commissioner of the Ghana Revenue Authority (GRA), has appealed to the winning party, to retain the tax measure to ensure continued revenue generation for the state.
Speaking to the media on the sidelines of another programme dubbed; Taxing Mobile Money, Lessons and Ways Forward Conference held in Accra on the same Wednesday, February 28, 2024, the GRA Assistant Commissioner said, the risk of over-dependence on loans by the country if the E-Levy is discontinued.
The E-Levy, introduced as part of measures to boost domestic revenue mobilization, faced criticism and was later revised downward from 1.5% to 1%, following public outcry.
The political landscape is now marked by promises from both the New Patriotic Party (NPP) and the National Democratic Congress (NDC) to abolish the E-Levy, if elected into office next year.
Terkper counters this argument, pointing out that there are existing pillars for revenue generation, including petroleum, import duty, excise tax income, and corporate taxes.
He attributes the revenue shortfall to government mismanagement, reckless spending, and indiscipline, which have hindered the effectiveness of these revenue streams.
The former Finance Minister, contends that these fiscal challenges, coupled with excessive borrowing and debt payment issues, led Ghana to seek an IMF bailout programme.
Terkper emphasizes the detrimental impact of the E-Levy on digital economy transactions, reinforcing the need for its abolition.
Expressing his stance, Terkper dismisses the Vice President, Dr Mahamudu Bawumia’s recent promise to abolish the E-Levy, stating that he had made this call long before, and urges Dr Bawumia, to support his earlier position, emphasizing that the E-Levy has adverse effects on the digital economy.
Terkper maintains that there are pillars on which taxes can be raised and that have been identified and structured on petroleum, import duty, excise tax income and cooperate taxes which are enough revenue streams for the country.
“I do not support the Vice President saying the e-levy should be scraped. I made that call long ago. It is in the BFT newspaper. He is late. He should support my call”, he stressed.
Terkper said that the NPP government cannot continue to blame COVID-19 for the country’s economic challenges.
According to him, the government continues to increase its expenditure and turn around to blame COVID-19 despite a $6 billion revenue flow during the pandemic.
He said Ghana should move beyond using primary balance (excluding net interest payments on public debt) as a basis for saying that the economy is doing well.
He argued that the best way to determine whether the economy is doing well is to use the physical balance (the difference between a government’s revenues and its expenditures).
“COVID came and we blamed everything on COVID but we had $6 billion coming in during the same pandemic. And I’m talking about American dollars.”
“We are on a slippery ground if we continue to use primary balance as the basis of saying that the economy is doing well when we should have used the fiscal balance to be able to make a proper assessment. This is because primary balance excludes interest payments on our public debts which we all know is very huge now,” Seth Terkper said at the PFMTax Africa’s media dialogue on Ghana’s IMF programme.
The Assistant Commissioner of GRA had entreated the government to sustain the E-Levy to increase the country’s tax to GDP rate, as well as, boost the local economy.
He stressed that every government needs revenue to steer the affairs of the nation.
The GRA Assistant Commissioner said, “It is good that people pay tax. We are having some political talks that the tax may be cancelled in future. We are pleading that it is better we sustain the revenue that is coming from it, GHC1.2 billion that was raised in 2023 helped in filling some holes in the country, otherwise, we may be depending too much on loans which is not helping the economy.”
“My plea is that we maintain and help increase the tax to GDP of the nation to help the development agenda of the government. Whichever government is in power needs revenue to run. Without tax revenue, the country cannot run,” he added.
It would be recalled that the flagbearer of the NPP, Dr Mahamudu Bawumia, on February 7, 2024, announced his intention to abolish the electronic transfer levy if elected president of Ghana.
“To accomplish this, there will be no taxes on digital payments under my administration. The E-Levy will, therefore, be abolished,” Dr Bawumia stated.
His contender, John Dramani Mahama, also made the same promise while speaking at the University of Ghana.
The NDC flagbearer was of the view that the tax was unfair and prevented citizens from embracing a cashless society.
“It is an inequitable tax; it’s not a fair tax. It prevents people from the uptake of our moving towards a cashless society and so when NDC comes, we will remove that tax. I’ve said it bluntly,” Mahama said.
