A former Finance Minister, Dr. Kwabena Duffuor has described the proposed Electronic Transactions Levy (e-levy) in the 2022 national budget as a problematic policy that could derail the gains made in enhancing financial inclusion.
The 1.75 percent e-levy which was announced by the finance minister during the budget presentation in parliament is expected to tax all electronic transactions including MoMo, bank transfers, merchant payments and inward remittances.
The Minority group in parliament has opposed the levy, citing it as one of the main reasons for rejecting the entire budget.
Delivering a lecture themed “The Ghanaian Dream: Transforming the economy, through the creation of jobs and opportunities for all”, Dr. Duffuor said taxing modes of payment will discourage people from using electronic transactions in Ghana.
“This tax could undermine the Ghanaian Digital Economy. This is because taxing modes of payment could lead to instantaneous double taxation since the underlying income, and commodity would have normally been taxed already,” he said.
He pointed out that ordinarily taxes are imposed on incomes, gifts and consumption as well as held properties or assets but not modes of payment.
“Electronic transfers or payments are none of these. Indeed, modes of payment should not attract taxes or levies,” he stressed adding that imposing taxes on payments cannot be widening the tax net.
Providing some solutions, Dr. Duffuor maintained that there is so much additional revenue that can be generated from the extractive sector which is largely in the hands of the private sector without burdening the public with new taxes.
“Our estimates show that by adopting the same approach that Ghana’s peers use to generate revenue from their extractive sector, Ghana can generate additional US$4.5 billion from the sector yearly”
Dr. Duffuor explained that the money would amount to 25 billion cedis—far more than the 6.9 billion cedis expected to be raked in from the e-levy in 2022.
Dr. Duffuor with his experience from the Bank of Ghana and later as Finance Minister proposed practical steps that could blend monetary policy and fiscal policies to create jobs for the youth.
He stated that the problem of unemployment among the youth could be attributed to four main goals that must be worked at.
He proposed an increase in investment for education and vocational training to help make grandaunts employable.
He added that government must pursue economic policies that ensure equal opportunities for the youth regardless of their background.
“Third is entrepreneurships which means making it easier to stat and run enterprises in order to provide more jobs for the youth. And lastly is employment creation which means placing the job creation at the center of macro-economic policy”.