An Economist and Finance Lecturer at the University of Ghana, Prof. Godfred Bokpin, has joined calls urging the government to scrap the Electronic Transaction levy (e-levy) following the decision to seek an International Monetary Fund (IMF) bailout.
He believed the e-levy was needless once government has decided to engage the IMF.
“One of the things I’m looking forward to government doing as we engage the IMF is to suspend the e-levy. The government should take advantage of the mid-year review and suspend it. And then let’s look at other compliant measures we can use to rake in a lot more money. Because the digital agenda is important,” he said in an interview with Joy FM in Accra on Wednesday.
Prof. Bokpin was contributing to discussions on government’s decision to seek an IMF bailout and matters arising.
He also mentioned that for the government to achieve the kind of economic stability it expected, it urgently needed to adopt prudent measures, including immediately passing the Exemption Bill.
Meanwhile, the Finance Ministry has disclosed that government will not terminate the 1.5 per cent levy on electronic transactions, despite its application to the International Monetary Fund (IMF) for economic assistance.
This was contained in a statement from the Ministry on Tuesday, addressing key questions regarding government’s ongoing engagement with the Fund.
Regarding the controversial levy, the Ministry explained that government will add the proceeds from the levy to the support from the IMF to salvage the economy.
Addressing the question of whether the levy will be scrapped, the Ministry said, “No. The IMF lending to Ghana will be for balance of payments support (i.e. to shore up the international reserves).
“Government is committed to ensuring the smooth operationalisation of all taxes including the e-levy to ensure that in addition to the IMF’s resources, government can continue to support its developmental goals on its own while ensuring that tax-to-GPD ratio increases to the peer range of 16-18 per cent”.
It continued: “An IMF-supported programme is likely to encourage the government to investigate the factors hindering the success of the e-levy (including by providing technical assistance if needed) and come out with strategies to improve it”.
The Finance Ministry also noted that additionally, other tax measures could be considered for the medium-term.
By this information, Ghanaians will continue to pay the levy, despite the widespread public angst against the policy.
The tax initiative, which was rolled out on May 1, has however failed to generate the projected revenue for the government.