Government risks stifling the emerging e-commerce Industry, digital finance ecosystem and its own economic digitalisation and financial inclusion drive if it goes ahead with the announced levy on electronic transactions.
The proposed 1.75 percent E-levy on mobile money, online shopping and other digital transactions as contained in the 2022 budget, according to the e-Commerce Association of Ghana (eCAG), will erode gains made in building a buoyant e-commerce industry, financial inclusion and a digitalised economy.
“In as much as we – as the industry association of Ghana’s online retail – are not against the government finding creative ways of generating revenue to administer their mandate, we wish to draw to their attention to some of the negative impacts that this new E-levy is going to inflict on e-commerce and affiliated industries in Ghana,” Executive Director of eCAG, Paul Asinor, said in a statement.
By imposing the levy on electronic transactions, he said, they will be made expensive; which will discourage people from using digital and online payment platforms. This, he added, could leave the largely unbanked population out of the financial inclusion bracket.
Mr. Asinor, who described the move as a sharp U-turn and diversion of the state-sponsored vision of a cash-lite economy, further noted that the levy will take a negative toll on the use of digital payments and take the economy back to the ‘cash is king’ era – adding that it will also slow down the development of e-commerce in the country, as most payments are made through mobile wallets and fintech platforms today.
The return to increased cash transactions in particular, the statement said, will also cause loss of jobs in the fintech industry, and compromise the safety of delivery riders as they will become potential targets for armed robbers.
The association also warned of potential loss of tax, as the policy threatens to cause a reduction in online sales and might be counterproductive to the idea of shoring-up tax revenue via the E-levy.
“We therefore seek, as a matter of urgency, to engage with the Ministry of Finance and all other relevant stakeholders to discuss this E-levy and its impact on online businesses and jobs, to have another look at and possibly reduce or even suspend it,” said eCAG.
On whether the industry was consulted, Mr. Asinor said government only met industry players for the first time about the E-levy two days after announcing the tax. The meeting was to discuss the implementation modalities come January 2022.
Meanwhile, the announced electronic tax will have to be approved by Parliament before implementation. The minority has however said it will resist its implementation.