Mr. Ken Ofori-Atta, the Finance Minister has argued the proposed 1.75% E-levy forms part of efforts to broaden the tax net.
The Minister reiterated his position that recent economic data suggests that the overall tax to GDP ratio for SSA in 2018 was 16.5% whereas the tax to GDP ratio for Ghana in 2019 was estimated to be 12.2%.
“Our tax-to-GDP ratio is lower than our peer countries in West Africa and significantly lower than many developed nations. (South Africa- 26.7%, Senegal- 16.4%, SSA average-16.5%, Ghana-12.2% in 2019).
Addressing the press on Monday, December 6, 2021, he said these statistics are a poor reflection on the country and highlight the need to change the narrative.
“We cannot continue to depend on such a low tax base to generate adequate revenue, service and reduce our debt, to build our infrastructure (roads) and to create needed jobs for our youth. The Future is therefore one of “sacrifice” from all of us and “burden” sharing as a people with one language to transform the Republic.”
The Minister added that “Furthermore, out of about 18 million potential income taxpayers:
i. Only 2.4 million persons (approximately 8% of the total population) are registered as personal income taxpayers as of August 2021; ii. Only 45,109 entities are registered as corporate taxpayers while 54,364 persons are registered as self-employed taxpayers at the Ghana Revenue Authority; and iii. There are about 17 million registered voters and about 19 million active mobile money accounts.
In using the 17 million registered voters or the 19 million mobile money accounts as a proxy for Ghanaians that are of adult age and economically active, and comparing it to the 2.4 million Ghanaians who pay income tax, we are confronted with the stark reality that the structure of our economy is quite informal, unlike the western economies, and as such, the traditional tax handles, like the personal income tax, also known as PAYE, may not be as effective in raising the required revenue.”
He said ” we are determined to enhance domestic revenue mobilization. The essence of our proposal on the E-Levy is to widen the tax net and generate the required revenue to support entrepreneurship, youth employment, build our infrastructure (especially roads) and reduce our debt.
The E-levy he indicated presents us with an opportunity to widen the tax net and generate more revenue.
“Permit me to emphasize that the E-Levy represents our greatest opportunity to, in the medium term, broaden the tax base and meet the Taxto GDP ratio of 20% as pertains among our peers. To lessen the impact of the E-Levy on consumers and subscribers, especially the more vulnerable, we shall work with all the stakeholders including the TELCO’s to ensure that the all-inclusive cost is reduced by 0.25 percentage point. We shall also ensure that administration measures will be taken to avoid attempts at evading the E-Levytaxes.
The proposed E-Levy is largely progressive. We have intentionally, set the GH¢100 threshold (covering about 40 percent of momo users), mindful of the need to exempt vulnerable groups, while continuing to encourage the development of our nascent digital economy. This, to a very large extent, will ensure that a significant number of Ghanaians, low-income earners in the informal sector, whose daily transactions fall below the GH¢100 threshold are totally exempt from the payment of the E-Levy. There are other issues that have been raised by the Minority Causus and concerned citizens such as increasing fuel prices, poor infrastructure (estimated at about USD 522 billion over the next 10 years), insufficient job creation.”
He said: “The provision of the threshold demonstrates a caring government, the actions of a government that has, since 2017, implemented some of the most innovative social interventions that this nation has ever seen. As you can see from the Budget, various measures have been outlined to
We will continue to remain people-centred in our transformation agenda. Through the E-Levy and other revenue/financing sources, we will:
i. Establish the unprecedented GHS10 billion YouStart programme, our vehicle to remove the fundamental impediment to the growth of enterprises in Ghana – “Access to Credit”. We will also address the provision of the requisite skills for our young people to confidently start, manage and expand their own businesses, while expanding the private sector to create more jobs;
ii. significantly overhaul the digital infrastructure on which the transactions occur. This is to increase the assurance and protection as well as security within this cyberspace;
iii. aggressively expand the digitalization agenda to bring more convenience to Ghanaians. Efforts to improve the delivery of health by digitising records, supporting platforms for e-pharmacy, and improving birth certificate issuance to newborns will be sustained with funding from this levy; and iv. to expand road infrastructure. We are currently working with the Ministry of Roads and Highways to finalise all the roads to be supported by the E-Levy. We expect to publish this list by the end of this Year.”
Fellow Ghanaians, putting a levy on electronic transfer is undoubtedly a new and innovative way of raising revenue that leapfrogs the lack of the typical infrastructure that is required to collect taxes via traditional means. This approach capitalizes on the new digital age that we find ourselves in today and the advent of e-money and proliferation of online transactions. Most of us today are just as comfortable ordering food online or clothes from a virtual shop as we are walking into a shop or a restaurant. We need to review our approach to tax collection to reflect this new reality.
But of course with all such new cutting edge and innovative initiatives we do expect to encounter some challenges during the implementation stage as we humbly request that you all bear with us as we roll out this new way of revenue collection. We will also set up call centers to receive any complaints and/or suggestions.”
By: Rainbowradioonline.com/Ghana
