A former Minister of Finance, Seth Terkper, has urged the government to rethink its decision to impose a 1.75 percent E-Levy on Mobile Money and other electronic transactions.
He explained that the Mobile Money sector was relatively new, and the taxation of financial services under the new economy must focus on core financial services that had matured.
“Consumers are already paying existing Communication Service Tax (CST), which has similar objective as E-Levy, to support and assist entrepreneurship to create employment opportunities for the youth because CST is service and consumption taxes, ultimately consumers are going to pay,” Mr Terkper intimated.
Sharing his views on the 2022 Budget Statement and Financial Policy at a virtual meeting organised by PFM Tax Africa, he noted that even though businesses were supposed to pay, it would be pushed to consumers.
The E-Levy, which was announced by Ken Ofori-Atta, Minister of Finance, during the 2022 Budget presentation in Parliament, imposes1.75 percent tax on mobile money and other electronic transactions exceeding GHC100 per customer per day.
It has since attracted varied reactions among the public concerning appropriateness of the levy, whereas section of the public completely rejects the levy, others have called for downward review of rate to ensure it did not stifle interest in digital payment services.
Mr Terkper described as ambitious GHC100.51 billion revenue target set by the government, and last time it hit 17.5 percent of Gross Domestic Product in terms of revenue as targeted in 2022 was pre-rebasing.
He asked the government to take steps to automate domestic tax system to make tax regime flexible, but when it was complex, only few people would comply because they must file separate returns for other regimes.
“Ghana Revenue Authority will collect taxes separately which complicates administration since it is not automated and needs comprehensive reform. However, the government is seeking approval from Parliament to spend GHC137.5 billion for the 2022 fiscal year.
“Amount, which is 27.4 per cent of Gross Domestic Product, represents an increase of 23.2 percent over 2021 projected outturn of GHC111.6 billion. Out of the amount, compensation for employees is projected at GHC35.84 billion, goods and services are also projected at GHC9.14 billion, with interest payments projected at GHC37.44 billion,” Mr Terkper proffered. –GNA