Ghana gov’t to reduce e-levy rate from 1.5% to 1%

The Minister of Finance, Mr Ken Ofori-Atta has announced a 0.5 percent reduction on the controversial electronic transaction levy(e-levy) introduced by the government of Ghana this year.

The reduction brings the levy to 1% instead of the initial 1.5% charged.

Mr Ken Ofori-Atta made the announcement in the 2023 budget statement on the floor of Parliament on Thursday, November 24 monitored by GhanaPlus.com.

“Mr. Speaker, Government has received several proposals for review of the Electronic Transfer Levy and is working closely with all stakeholders to evaluate the impact of the Levy in order to decide on the next line of action which will include revision of the various exclusions. As a first step, however, the headline rate will be reduced to one percent (1%) of the transaction value alongside the removal of the daily threshold,” Mr Ofori-Atta said.

Mr ofori- Atta also announced a proposed “increase the VAT rate by 2.5 percent to directly support our roads and digitalization agenda;  Fast-track the implementation of the Unified Property Rate Platform programme in 2023; and Review the E-Levy Act and more specifically, reduce the headline rate from 1.5% to one percent (1%) of the transaction value as well as the removal of the daily threshold,” he added.

E-levy, a 1.75% electronic transfer charges on transitions above ₵100 and applicable to senders only, later reduced to 1.5% was approved by Ghana’s Parliament on Tuesday March 29 and signed into law by the President of Ghana, Nana Addo Dankwa Akufo-Addo on Thursday, March 31 despite stiff opposition by Minority in Parliament and Ghanaians.

The levy was among other things expected to help widen the tax net, rope in the informal sector into the country tax system and generate some ₵6.billion to support government programmes in the areas of job creation, infrastructure etc.

“After considerable deliberations, the government has decided to place a levy on all electronic transactions to widen the tax net and rope in the informal sector. This shall be known as the “Electronic Transaction Levy or E-Levy”, Mr Ofori-Atta told Parliament when he first announced the e-levy.

It is also to enable government fund it new flagship programme YouStart, an entrepreneurship programme for the youth in the country and many more.

E-levy generated 10% of estimated revenue – Gabby

However, the e-levy is yet to meet its expectation.

As at June this year, the levy was said to have made only, 10% of its projected revenue.

“After 5 months of stalemate and bashing, the e-levy, after implementation, is delivering only 10% of estimated revenues; our revenues remain very low as compared to the rest of the world; debt levels dangerously high, cedi, like most currencies, struggling against the US dollar,” a member of the ruling New Patriotic Party government, Gabby Otchere Darko said in a twitter post.

“Our economy is growing faster than most countries around the world. But, that alone can’t save us as confidence in our ability to service our debts is lowering. We can’t continue to use all the little revenues raised to pay our debts. Very soon we may have to borrow to pay wages.”

“What options are open to government? The question should rather be: what option, if adopted, will re-inject investor confidence in our economy? Even if we find the $3-5 billion required, will that help? E-levy which was to have given us some 600 million [cedis] by now has done less than 60 million [cedis],” he added.

Source: GhanaPlus.com