2022 Budget fallout: Majority clash over e-levy …ahead of debate in Parliament

The Majority and Minority caucuses in Parliament are currently on a head-on collision following the introduction of government’s proposal to place 1.75 per cent tax on all electronic financial transactions, popularly referred to as the e-levy.

While the Minority caucus has vowed to kick against the government’s proposal because the tax would overburden Ghanaians, the Majority contend that it was a progressive tax that would contribute to national development.

Minority Leader, Haruna Iddrisu, during a Post-Budget workshop in Ho on Saturday, said the tax was a disincentive to investments and private sector development.

 “Our concern is whether the e-levy itself will not be a disincentive to the growth of a digital economy in our country. We are convinced that the e-levy may as well even be a disincentive to investments and private sector development in our country.

We in the Minority will not support government with the introduction of that e-levy. We are unable to build national consensus on that particular matter,” he said.

However, Deputy Minister of Finance, Dr John Kumah explained that the GH₵100 limit for the e-levy was meant to protect the poor and vulnerable in society.

According to him, a survey by the Ministry informed the decision to exempt transactions up to GH₵100 from the levy.

Dr Kumah explained that the exemption would enable the many poor people who use mobile money for their transactions, to continue using the service.

“So we noticed that about 30 percent of people who use Momo in Ghana do not do more than GH₵100 a day and that covers the poor category of Momo users. This policy exempted any Momo transaction that is up to GH₵100 and below GH₵100.”

He clarified that it is the sender, and not the receiver who would bear the cost of the 1.75 percent charge on e-transactions that are above GH₵100.

The reason for this, he said is because usually, those who receive money electronically are the same category of people who need support, and thus don’t need to be taxed.

“This is one of the progressive taxes in terms of the ability to pay principle in tax. It is one of the most equitable tax in terms of its outreach.

If you are a banker and you send Momo (mobile money), and you meet the threshold, you pay. If you are a carpenter, a mason, or a farmer, and you send within the threshold, it covers you. There’s nothing like we are over concentrating on a particular section of society,” he added.

Meanwhile, some agents and users of Mobile Money (MoMo) have expressed their displeasure at government’s proposal.

Speaking with the Ghanaian Times in Accra on Thursday, some distraught mobile money agentsand users at the Kaneshie, Odawna and the Central Business District (CBD) markets said the directive was absurd and unacceptable.

According to some agents, they were already earning little to nothing as commissions from their transactions so issuing the directive was like “adding salt to injury.”

An agent at the CBD market who gave her name as Ivy Padmore told the Ghanaian Times that government was just being inconsiderate and unfair to both agents and users stating that “government only wants our business to go down the drain.”

“Already the telecommunication companiesare giving us meagre percentages on all transactions we do while they take the chunk of it,” she added.

Akua Frema, a user similarly stressedthe view that there was no need for the additional charges as people would have no interest in the use of the mobile money as they would prefer dealing with cash.

“So if government is adding more percentages then it means we are still losing out and will have to pay more charges which is discouraging,” she added

Mr Lexis Amoateng, an agent at the Odawna market said he seconded the fact that it was needless for an addition of charges because “that will eventually render most people jobless because they will no more be patronized.”

He underscored that he was already losing his clients, hence, he called on government to as a matter of urgency, scrap the charges “in order to make electronic transactions more attractive to people.”

At the Kaneshie market, users and agents of mobile money reiterated the need to cut off the percentage and maintain the existing charges as going by that directive “will leave them in a miserable state.”

The e-levy, according to the Finance Minister, Ken Ofori-Atta is to widen the tax net and rope in the informal sector under the “Electronic Transaction Levy or E-Levy.”

He said the electronic transactions covering mobile money payments and inward remittances would be charged at an applicable 1.75 per cent which shall be borne by the sender except inward remittances, which shall be borne by the recipient.

“Mr Speaker, to safeguard efforts being made to enhance financial inclusion and protect the vulnerable, all transactions that add up to GH₵100 or less per day (which is approximately GH₵3000 per month) will be exempt from this levy,” Mr Ofori-Atta said when he delivered the 2022 Budget Statement and Economic Policy of Government themed “Agyenkwa Budget (The Saviour budget)” in Accra on Wednesday.

As a result, the new charge on GH₵150 is GH₵ 4.50 as against GH₵1.50 previously; GH₵ 200,from GH₵2 to GH₵5.40; GH₵300, from GH₵3 to GH₵8.10; GH₵400, from GH₵4 to GH₵10.80;  GH₵500, from GH₵5 to Gh₵13.50; GH₵1000, from GH₵10 to GH₵27.

BY ABIGAIL ARTHUR

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