"E-Levy Is A Necessary Tool To Increase Our Tax To GDP From Circa 13% To 16%" - Finance Minister
The Minister for Finance, Ken Ofori-Atta has reiterated that the much-talked-about E-Levy is a necessary tool to increase the country’s Tax to GDP from circa 13% to 16%.
According to the Finance Minister, it will also guarantee the citizenry to pay.
Addressing Journalists in Accra on Wednesday, the sector Minister said "The E-Levy would not only ensure that we move towards a more sustainable debt level but would also ensure that we have the revenues to sustainably invest in entrepreneurship, youth employment, cyber security, digital and road infrastructure"
Mr. Ofori-Atta also stressed that the E-Levy will also provide a means for Ghanaians to help support their country and grow the economy.
The Finance Minister, however, noted undeniably that digitalization is eroding the traditional resilience of brick and mortar enterprises.
He stated that with fewer transactions happening across the counter, there is an increased risk that some of the standard revenue generation and tax measures will gradually become obsolete.
"Indeed, except for Excise duties, the various tax types experienced a marked decline in growth between 2019-2020. Domestic VAT, for instance, which has traditionally been a significant component of Ghana's tax framework, increased by 3% between 2019-2020, compared to 29% between 2018-2019. Indeed, it is clear that Government must adopt a revenue mobilization approach befitting the evolving digital age"
Mr. Ofori-Atta reminded Journalists that the E-Levy was borne out of a careful study of current trends in the rapidly evolving digital age and is specific on the transactions on which it will be applied.
"Following the presentation of the budget on November 17th and the discussions that followed, we have had extensive stakeholder engagements including Parliament, representatives of FBOs, the Banks, and Chamber of Telecommunications, Civil Society Organisations, and I have had smaller intimate conversations with citizens across a few constituencies in Ghana. The various concerns have been heard and we have found a way to address these concerns without an adverse fiscal impact" he stated.
Touching on the spirit of burden sharing, Mr. Ofori-Atta disclosed that the Telcos have agreed to reduce their charges by 0.25% to reduce the overall net impact of the levy on subscribers.
"We want to take this opportunity to thank our friends in the Telecom Industry and we believe that by this measure, we can raise the requisite resources to bolster our fiscal position while keeping an eye on transaction costs and consumer welfare and reducing the impact on the average Ghanaian and keeping the resources required for our growth agenda" he stressed.
Mr. Ofori-Atta explained that after extensive consultations, the E-levy will be re-submitted to Parliament this month.
He was confident that his people will join hands with the Members of Parliament (MPs) to approve the E-Levy on a consensus basis in order to pave way for a collective discussion on the issue of unemployment.
"Let me be clear today, the E-Levy will cover the mobile Money Transfers between accounts on the same electronic money issuer (EMI); mobile Money transfers from an account on one EMI to a recipient on another EMI; transfer from bank accounts to mobile money accounts. Transfer from mobile money accounts to bank accounts and bank transfers on a digital platform or application which originate from a bank account belonging to an individual to another individual"
Mr. Ofori-Atta emphasized that E-Levy will not impact cumulative transfers of GHS 100 per day made by the same person.
"Transfers between accounts owned by the same person. Transfers for the payment of taxes, fees, and charges on the Ghana.gov platform; electronic clearing of cheques.
He also warned that should there be a realization that certain migrations have avoided paying, his Ministry shall invoke appropriate administrative measures.
Mr. Ofori-Atta again told Journalists that effective January 20th, a team comprising himself, colleague Ministers, and other key members of Government will embark on a public engagement and sensitization campaign across the country.
He noted that they intend to communicate clearly on the proposed mechanics of the E-levy, its potential benefits to the people of Ghana within the spirit of burden-sharing.
Mr. Ofori-Atta stressed that the communication will guide the citizenry in its development efforts as the country moves Ghana Beyond Aid.
"Is I have indicated already, we intend to use the money to create jobs and grow our private sector to employ more of our youth; accelerate the digitalization agenda to bring more convenience to Ghanaians, and enhance the security of our digital platforms" he noted.
He said "Ladies and Gentlemen, a strong recovery needs a clear plan for the future. Initiatives such as the E-levy showcase our determination to build the stronger future our country deserves"
The Finance Minister hinted that contrary to other assessments, he wishes to stress that Ghana's economy will continue to get stronger.
He mentioned that the concerns of citizens rating agencies linger on revenue mobilization, lack of access to the international market, and the E-Levy impasse.
"We shall overcome there!!. Similar to most economies, we are emerging from the devastating impact of the CoVID-19 pandemic. In spite of this, we do not face an imminent external imbalance. We have over 5 months import cover which is well above our internal target of 4 months and better than the average over the previous two decades" he said.
Although the current debt-to-GDP ratio as of the end of November 2021 is 78.4%, it reveals a reduction in the rate of debt accumulation (i.e. declined by 34% in 2020 to 18% as of November 2021) adding that Bloomberg updated their publication that wrongly reported Ghana’s debt to GDP ratio 81.5% to reflect the correct figure as above.
"We project to achieve a positive Primary balance target to improve stability and reduction in the debt to GDP ratio in 2022 and through the medium term. In fact, restoring fiscal discipline and putting the public debt on a sustainable downward trajectory is a priority for Government to achieve fiscal consolidation"
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Story by: Joshua Kwabena Smith