Parliament rejects 2022 Budget

Parliament rejects 2022 Budget

Parliament, for the first time in the fourth Republic, has rejected the Budget Statement and Economic Policy of government for the 2022 financial year which was presented to the House on Wednesday, November 17, 2021 by the Finance Minister, Ken Ofori-Atta.

This comes following divided opinions from the majority and minority caucuses on some of the policies stated in the budget especially the newly introduced levy, Electronic Levy (E-Levy).

This compelled the Finance Minister, who was present in the house, to pray the house’s permission for some time to engage leadership of both the minority and majority before the question is put to the house for approval or rejection.

“In listening to both the majority and minority, it is clear that there are great divisions on where we want to go as a nation. I have heard the passion with which the minority leader engaged us, and I have also listened throughout the past 10 days, what have been said in the media. We have also equally heard what we, the majority believe in.

My prayer to you Mr. Speaker, is to enable me to engage with the minority, extended caucus, leadership, and also the majority before the question is put to vote. It is important that we leave this house as a people with one language. So, I implore you Mr. Speaker, to give me the opportunity to further engage our people on the minority as Ghanaians always would, so that we can go forth in tandem together with one language,” the Finance Minister prayed.

The House subsequently rejected the minister’s prayer, and also voted against the motion for the approval of the budget, in the absence of the majority group who staged a walk out form the house.

Presenting a concluding remark on the budget debate prior to the rejection, the Minority Leader, Haruna Iddrisu maintained his caucus’ stance on the disapproval of the newly proposed Electronic Transaction Levy (E-Levy) introduced in the 2022 budget.

Among other concerns raised regarding some of the policies contained in the budget, he stated that the E-levy particularly, “turn the country backwards,” by affecting small businesses and individuals as well.

“We want to stand united, collectively, that we are against the introduction of e-levy on electronic payments and transactions, and we will not support this budget if that is not withdrawn for revision and further discussions with stakeholder. MoMo tax will affect poor ordinary Ghanaians and therefore, it should be suspended and shelved”, the minority leader said.

He further accused government of being opportunistic by taxing mobile money transactions, because data has shown that digital transactions in the country grew astronomically in 2020, compared to the previous year.

According to him, the sharp rise recorded last year is due to the COVID-19 pandemic which discouraged person-person dealings.

As a means of expanding the tax net, the Finance Minister in the 2022 Budget, announced a 1.75 percent levy on all electronic transactions in the country, covering mobile money payments, bank transfers, merchant payments, and remittances.

“To better understand the nature of the transactions being undertaken on digital platforms, a survey across the country was recently undertaken. The preliminary result from this survey confirms that digital transactions have become the ‘primary’ tool in recent times for the payment for goods and services as well as for transfers and remittances locally, and in some cases, abroad. The survey also showed that digital transactions have far surpassed cash and cheques as the preferred medium for transactions.

Data from the Bank of Ghana also confirmed growing trend in online selling. The data showed that between February 2020 and February 2021 alone, Ghana saw an increase of over 120 percent in the value of digital transactions compared to 44 percent for the period February 2019 to February 2020.

The total value of transactions for 2020 was estimated to be over GH¢500 billion compared to GH¢257 billion in 2019 and GH¢78 billion in 2016 (just five years ago) while total mobile money subscribers and active mobile money users have grown,” the budget statement noted.

Meanwhile, Mr. Ofori-Atta also reminded the house that the country is at a crucial point, a situation that necessitated government’s proposals in the budget to establish a sustainable entrepreneurial nation, ensuring fiscal consolidation and job creation. “So, there are three main things that we are trying to tackle; the issue of debt, the issue of employment, and the issue of infrastructure through gathering revenues,” he added.

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