The Mobile Money Agents Association of Ghana (MMAAG) has urged the government to revise the daily threshold of the Electronic Transfer Levy (E-Levy) from GH¢ 100 to GH¢ 500.
It also called for a further reduction of the rate charged on daily transactions exceeding GH¢ 100 from one per cent to 0.5 per cent, while addressing the loopholes in the tax handle to stimulate tax compliance and revenue target actualisation.
The call comes as the government implements the new one per cent rate, effective Wednesday, January 11, 2023, a 0.5 downward percentage revision from the previous 1.5 per cent rate.
A study by the Centre for Economics, Finance, and Inequality Studies (CEFIS) has shown that a reduction of the rate to 0.5 per cent could increase revenue from the levy to GH¢ 3.2 billion in 2023, which is higher than the government’s projected GH¢ 2.6 billion for the same period.
The figure is expected to increase to GH¢ 3.6 billion in 2024, and to GH¢ 4bn by 2025, which are equally higher than the government’s expected revenue of GH¢ 3bn and GH¢ 3.4bn for 2024 and 2025 respectively.
The Centre noted that a 0.5 tax rate on E-levy would increase tax compliance, hence more transactions through MoMo – the major source of electronic transactions, particularly among the poor and the number one driver of financial inclusion in Ghana.
When the Ghana News Agency spoke to Mr Evans Otumfuo, the General Secretary of MMAAG, he described the reduction of the rate from the 1.5 per cent to one per cent as welcoming.
Mr Otumfuo, however, said there was the need for a further reduction because the 1.5 per cent rate had put pressure on the MoMo industry and negatively affected their operations and that of other businesses.
He said,“The rate should come down and when that’s done, people who may think of alternatives will see the rate as insignificant and they’ll gladly accept to pay, so we’re calling for a rate for the levy to be between 0.1 to 0.5 per cent.”
He added, “If you walk to the bank, you’re at liberty to transact GH¢ 20,000 daily without any E-levy applied to you, but if you come to the MoMo platform, it’s only GH¢ 100. So, the threshold for MoMo should be extended to GH¢ 500.”
“Consumers are sensitive to prices such that when prices are lower, consumption will be higher, so with the data that will come from the volumes of transactions, we expect that going into the mid-year budget review or the 2024 budget preparation, there should be a further reduction in the rate.” Mr Otumfuo said.
The government’s hope of raking in about GH¢ 6.9 billion in taxes from the E-levy failed in 2022, leading to several revisions in the revenue projections with the recent one being GH¢ 594 million for quarter four of 2022 per data in the 2023 budget.
Data from the Ghana Revenue Authority (GRA) also showed that revenue from the E-levy between May and September 2022 was GH¢ 328m – which was some 10 to 15 per cent month-on-month improvement in the collection of the tax.