The electronic transfer levy, as assented to on the 31st march, 2022, is said to be imposed on electronic transfers to enhance revenue mobilisation by broadening the tax base and provide for related matters.
The Act regulating this levy, The Electronic Transfer Levy Act, 2022, Act 1075, spells out its management, collecting authority, payments, recovery and submission of reports, just as other existing national levies, and it is estimated to raise approximately GH¢6.9billion annually for the nation, which has been argued by the former finance minister, Seth Terkper, to be immaterial to overcoming the anticipated deficit gap of Gh₵37billion by the end of the year 2022 (Business and Financial Times Online, 2021).
According to Brian Bass in 2017, a government levy is a distinct tax imposed on citizens to cover budgets, related with routing the business of running towns, states or countries through referendums or laws (Brian, 2017). It represents an obligatory imbursement by a certain group of persons, to fund an associated public amenity and typically collected by a government or an agency formed by the government (Fingleton, 2005; Oyedele, 2014).
Commonly, the policy in managing taxes is to require all proceeds collected by government be paid into a collective or consolidated fund first, after which payouts are made according to law and budgetary apportionments which is the case of the Electronic Transfer Levy of Ghana, popularly referred to as e-levy.
However, there also exist occurrences where special funds are established for special taxes or levies to be paid into for specific government agenda and this is often associated with setting up boards or other establishments, to direct the raising of the levy and its application to the distinct purpose concerned. In this way, government actions are lifted to such establishments, with probable consequences of lessening political interferences (Fingleton, 2005).
The latter is the approach of special purpose levies (SPLs) which I wish to suggest Ghana’s e- levy to be. I believe the design of Act 1075 has not been narrowed enough to meet some specifics in terms of government agenda to channel these funds into, guaranteeing accountability now, and in the future and continuity in national developmental policies, regardless of which government is in power.
For instance, the Act states the electronic transfer levy (e-levy) is imposed to ‘enhance revenue mobilization’, which could only mean to improve, augment, increase, boost, supplement or complement all existing efforts, bringing in income to the nation coffers. Taxation has always been a traditional way by which governments around the globe raise funds to finance its needs from its citizens or entities (Fritz et al, 2022), and only by improving or increasing it won’t be enough of a purpose to impose a levy that before its passage, had caused chaos in the Ghanaian parliament (Graphic Online, 2021; Africanews, 2021).
Narrowing the purpose to meet a special demand or project or challenge being faced by the country, would be prominent to the administration now and in the future of this levy. We could take a clue from the equally popular Energy Sector Levies (ESLA) which was imposed to specifically combine all prevailing energy sector levies for their resourceful use, pay legacy debts and other obligations within the energy sector, enable maintainable longstanding investments in the energy sector, and provide for related matters (Energy Sector Levies Act, 2015; ESLA Report, 2016) in so doing, imposing the Energy Debt Recovery Levy to precisely take care of debt recoveries, Price stabilisation and Recovery Levy to be used as a buffer for under recoveries, and to ensure steady petroleum prices and merging already existing levies such as Road Fund Levy to maintain roads, Energy Fund Levy to support the Energy Commission of Ghana, Public Lighting Levy to finance the running of community lights and to maintain public and traffic lights and National Electrification Scheme Levy to fund national electrification plans (Energy Sector Levies Act, 2015).
We can likewise talk of the Financial Sector Recovery Levy, also paid into the consolidated fund, and collected by the Ghana Revenue Authority just as the e –levy, but specifically imposed on banks in Ghana to raise revenue to provide funding for the financial sector restructurings and to provide for related matters (Financial Sector Recovery Levy Act, 2021); the COVID -19 Health Recovery Levy which imposed a special levy on the supply of goods and services and imports to raise revenue to support the COVID–19 spendings and other associated matters (Covid – 19 Health Recovery Levy Act, 2021); Sanitation and Pollution Levy under the ESLA to improve the quality of air in the city areas; to design, construct, and re-engineer waste treatment and dumping amenities; to build public health amenities; to fund disinfestation; and to provide a devoted fund for the upkeep and running of key landfill spots and other waste treatment plants and amenities across the country, appraised to generate GH¢311.7million (N. Dowuona & Company, 2021); and an unending list of notable special levies such as National Health Insurance Levy, Exim Levy imposed to take care of some sort of specific government agenda.
Special purpose levies have a lasting history of meeting special needs for long-term investments, armor a sector against the instabilities of national budgets, help kindle a more effective administration by government agencies and permits better oversight on spending, and inasmuch as there are also disadvantages such as breeding corruption, trap funds which could have been used for a more beneficial investment and occasionally averting superlative apportionment of government budgets (Fingleton, 2005), which either of these could be the reason for formulating the electronic transfers levy in its current form, I still would suggest it should be a special purpose levy considering the current trend of government spendings (Bloomberg, 2022; Trading Economics, 2022) and the lot of government policies or agenda that need some kind of financial backbones to aid their execution (Agenda 111, Free SHS, 1D1F etc). These funds could be channeled into any of these projects to ensure that they are achieved and this way, Ghanaians subscribers to electronic transfers can concretely ascertain what they are paying for.
By narrowing the purpose of the electronic transfers levy, coupled with public education, could in a longer term affect the number of subscribers positively and increase financial inclusion contrary to the current situation where a lot of Ghanaians are withdrawing their funds upon hearing of the passage of the levy (Ghanaweb, 2022; Modern Ghana, 2022).
References
Brian Bass, (2017). The Definition of a Government Levy; https://bizfluent.com/info-8271373-definition-government-levy.html
Taiwo Oyedele, (2014). Is it a tax or a levy? What you should know about the new changes introduced by IFRIC Interpretation 21 on Levies: https://www.pwc.com/ng/en/assets/pdf/tax-watch-august-2014.pdf
Jim Fingleton, (2005). Funding options for agricultural development: The case for special purpose levies: https://www.fao.org/3/bb077e/bb077e.pdf
Business and Financial Times, (2021). E-levy too insignificant to close deficit gap, find better ways – Terkper; https://thebftonline.com/2021/12/08/e-levy-too-insignificant-to-close-deficit-gap-find-better-ways-terkper/
Neumark, Fritz, Cox, Maria S. and McLure, Charles E.. “taxation”. Encyclopedia Britannica, 3 Feb. 2022, https://www.britannica.com/topic/taxation. Accessed 9 April 2022.
Graphic Online, (2021). Blows in parliament over E-Levy voting; https://www.graphic.com.gh/news/politics/blows-in-parliament-over-e-levy-voting.html
Africanews, (2021). Brawl in Ghana’s parliament over proposed e-levy; https://www.africanews.com/2021/12/21/brawl-in-ghana-s-parliament-over-proposed-e-levy/
ESLA (2015). Energy Sector Levies Act, 2015, Act 899; https://www.eslaplc.com/pages/download/Energy_Sector_levies.pdf
Financial Sector Recovery Levy Act, (2021). https://gra.gov.gh/wp-content/uploads/2021/04/FINANCIAL-SECTOR-RECOVERY-LEVY-ACT2021.pdf
Covid – 19 Health Recovery Levy Act, (2021). https://gra.gov.gh/wp-content/uploads/2021/05/Covid-19-Health-Recovery-Levy-Act.pdf
- Dowuona & Company, (2021). Ghana Imposes New Levies on the Energy Sector; https://www.ndowuona.com/insights/114-ghana-imposes-new-levies-on-the-energy-sector
Ghanaweb, (2022). E-Levy passage triggers instant mad rush for MoMo withdrawals; https://www.ghanaweb.com/GhanaHomePage/business/E-Levy-passage-triggers-instant-mad-rush-for-MoMo-withdrawals-1504748
Modern Ghana, (2022). Massive panic withdrawals hit MoMo after passage of E-Levy — Ken Ashigbey laments; https://www.modernghana.com/news/1149161/momo-industry-experiencing-panic-withdrawals-after.html
Bloomberg (2022). Ghana Prepares Spending Cut to meet Budget Deficit Target; https://www.bloomberg.com/news/articles/2022-03-23/ghana-prepares-spending-cuts-to-meet-budget-deficit-target
Trading Economics, (2022). Ghana Government Spending; Ghana Government Spending – 2021 Data – 2022 Forecast – 2013-2020 Historical – Chart (tradingeconomics.com)
