A former Board Chair of the Ghana Revenue Authority (GRA), Prof. Stephen Adei, is making a case for the passage of the much-contested Electronic Transfer Levy (E-Levy).
He says the E-levy is a more viable alternative in terms of solving revenue shortfalls than suggestions for the country to seek a bailout from the International Monetary Fund (IMF).
Speaking in an interview, Prof. Adei, one-time Rector of the Ghana Institute of Management and Public Administration (GIMPA) maintained that the panacea to generating more revenue to revive the economy is to do that domestically through vehicles like the proposed E-levy.
“I don’t support us going to the IMF now. This is the time we have to stop this NPP and NDC thing and get [going]. I don’t think we need to go to the IMF because there are two things that will happen about policy descriptions and the amount of money we will get because they won’t give us more than half a billion dollars which is peanut and less than half of what E-levy will give us. So we need policy direction changes and actions, and we can do it domestically.”
For Prof. Adei, the amount anticipated to be realized from the E-levy is enough to seal some revenue loopholes, and must not be allowed to elude the government.
“I can see that they would be getting about GH¢ 5 billion. GH¢ 5 billion is still a big amount; that’s almost $1 billion. Even if they are not likely to get what has been projected given the situation we are in now, I believe that the MoMo must be taxed and, at least, it will help bring in GH¢ 5 billion to plug the hole”, the academic emphasized.
He backed his point by saying that the amount of money to be used in collecting the E-levy is low as compared to other tax policies that are costly in accumulation.
“Immediately, we must find low-hanging fruits and the MoMo [tax] is one of the low-hanging ones. In a developing country, one of the biggest challenges in taxation is that if the cost of collection, sometimes, exceeds what you’ll get, then you must, as well, let it go. With the MoMo tax, however, the cost of collection is almost zero”.
Currently, the national conversation has been around the government pushing through the controversial 1.75% electronic transaction levy estimated to rake in some $1 billion annually or going onto an IMF program.
The tax measure was announced by the government in the 2022 Budget on basic transactions related to digital payments and electronic platform transactions.
The rate in the budget was 1.75 per cent, but it is expected to be reduced to 1.5 per cent. Despite the intended reduction, there is still stiff opposition to its passage.
Some analysts have proposed seeking an IMF bailout as a better alternative amidst public disapproval of the E-levy, but the government has said it will have none of that.
Others have also brushed off calls for the government to go under an IMF programme, insisting that the options left for Ghana to consider are fiscal discipline, a reduction in wasteful expenditure, and the sealing of revenue leakages.