Mr Ken Ofori- Atta, Minister of Finance and Economic Planning, has announced plans to review the Electronic Transactions Levy (E-levy) Act and specifically reduce the headline rate from 1.5 per cent to one per cent of the transaction value as well as the removal of the daily threshold.
Ofori-Atta announced this during the presentation of the 2023 Budget Statement and Economic Policy on the floor of Parliament.
The E-Levy is a Levy on all electronic transfers of money apart from those excluded by law.
It was introduced to enhance domestic tax mobilisation and expand the tax base and provide an opportunity for everyone to contribute towards national development.
Collection of E-levy started on May 1, 2022 and so far, it has GH₵328.80 million as at the end of September 2022.
The Electronic Transfer Levy Act, 2022 (Act 1075) imposes a levy of 1.5% on electronic transfers
The Levy is charged to the transferor at the time of transfer.
The Levy is charged by the entities listed in the First Schedule to the Act.
It must be established that if the 1.5% was slapped on all transactions which was the original idea, the expected revenue would have been met.
However, stiff opposition to e-levy forced the government to exempt a greater chunk of transactions.
In addition to the exemptions, some people have also found a smart way of evading e-levy.
Desperate attempts by some customers to avoid the E-Levy have triggered the increased cash-in or deposit transactions.
Since withdrawal from Momo wallet is exempted from E-Levy, anytime people want to send money to someone, they tell the person to go to an agent and allow cash out.
The sender then sends his/her ID number, and transaction is through.
These and other strategies have affected the revenue generation.
Data from the BoG indicates that decline in the value of transactions is minimal.
Therefore, without exemptions and evasions, venues would have been closer to figures projected.
Ofori-Atta said that as part of an aggressive domestic revenue Mobilisation, the Government will fast-track the implementation of the Unified Property Rate Platform Programme in 2023.
The Minister has also proposed a 2.5 per cent increase in the Value Added Tax (VAT) to support roads and digitisation agenda of government.
VAT is applied on the value added to goods and services at each stage in the production and distribution chain.
It forms part of the final price the consumer pays for goods or services.
The 2018 Mid-Year budget amended the VAT rate from 15% to 12.5% and delinked the National Health Insurance Levy (NHIL) and Ghana Education Trust Fund Levy (GETFund Levy) from VAT.
The Minister said that as part of an aggressive domestic revenue Mobilisation, the Government would fast-track the implementation of the Unified Property Rate Platform Programme in 2023.
The Government had also proposed several measures to boost local production capacity, including supporting large-scale agriculture and agribusiness interventions through Development Bank Ghana and Agriculture Development Bank.
The Minister said public sector institutions that relied on imports either for inputs or consumption would be splashed by 50 per cent, working with Ghana Audit Service and the Internal Audit Agency to ensure compliance.
In export promotion, Mr Ofori-Atta said the country’s productive capacity would be expanded in agriculture to encourage the consumption of locally produced rice, vegetable oil, poultry and fruit juice, amongst others.
