In an unrelenting effort to broaden the tax base and increase revenue, Finance Minister Ken Ofori-Atta has reiterated the need to see the Electronic Levy (E-Levy) as a means of sustaining economic growth amid this period of coronavirus pandemic.
The 1.75 percent tax on all digital financial transactions was one of the main proposals of government in the 2022 budget presented to Parliament. This has been met with mixed reactions from the public, as it is argued that it will only place an extra burden on finances of the populace.
The Finance Minister, at government’s first town hall meeting in the Eastern Region capital, Koforidua, on the E-levy said it will be the most viable means of generating revenue and sustaining economic growth, as other options such as increasing petrol prices, among others, tend to have an adverse impact on Ghanaians.
Mr. Ofori-Atta defended the E-levy, saying it was introduced to broaden the tax base and deepen democracy.
“How do you deepen democracy if you do not pay taxes? We came back with several reasons to broaden tax base and increase revenue. The payment of taxes in Ghana is awfully low compared to our neighbours. We need to cure that,” he emphasised.
“The benefits have been for all of us: all-inclusive growth in which about 1.26 million children have benefitted from free SHS; GH¢3.45million covered by the school feeding programme; and over 334 households are given lifeline under the LEAP programme. So, for us, the sovereignty of our people is clear.
“We have to continue these initiatives, but the challenge is where do we get the resources to be able to do this? Traditionally, when you are caught in such a thing you increase petrol – and we know the cataclysmic effect that will have on all of us. So, the good Lord led us to the area of e-commerce,” Ofori-Atta remarked.
The Minister for Communications and Digitalisation, Ursula Owusu-Ekuful, at the town hall meeting also said that the nation cannot afford to keep begging or borrowing money to fund its development – hence, the country’s only option for raising additional revenue is to pass the 1.75 percent E-levy on financial transactions.
“If the funds are not generated internally, we either have to go and beg for aid or borrow and we cannot continue to borrow to finance our development. Ghana is seeking to meet its agenda of a Ghana Beyond Aid, and this requires all of us to support the E-levy and contribute our quota to national development,” she said.
Ursula Owusu-Ekuful warned that continuing to borrow money from donors will leave the economy worse off, not being independent or having a free hand to manage its affairs.
“So long as we are dependent on donors, they will dictate the pace of our development; so we need to rely less on donors to be truly independent,” she added.
She noted that although she was among those against the Communication Service Tax (CST) she has now realised how helpful it has been, and strongly believes that the E-levy will be the same.