Ranking Member on the Finance Committee of Parliament, Dr Cssiel Ato Forson, has predicted dire consequences for remittances into Ghana if the e-levy is implemented.
The opposition National Democratic Congress (NDC) Member of Parliament for Ajumako Enyan Esiam described the E-levy proposed in the 2022 budget as a three-legged tax in reference to three main transactions that the tax will cover – inward remittances, mobile money and bank transfers.
On inward remittances, he said the controversial E-levy will discourage the much-needed remittances that have become the life wire of the struggling Ghanaian cedi and drive the remittances market underground.
“Remittances have contributed immensely to the growth of the Ghanaian economy. Any attempt to tax it will discourage Ghanaians in the Diaspora from using the formal channels of transfer and encourage underground activities in the remittances market. It would also discourage Foreign Direct Investment,” he said Tuesday, November 23, 2021, during a debate on the 2022 budget in Parliament.
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On the bank transfers, he said if the E-levy is implemented, Ghana will become the only country that taxes the principal amount involved in a bank transfer.
“This policy is inimical to the growth of the banking sector and will be counterproductive. If care is not taken, it will send Ghana back to the cash economy in the 1980s and the banking sector will struggle to survive,” he said.
He further argued that the E-levy is a “super regressive tax” because when charged on mobile money (momo) transactions it will impose unbearable hardship, pain and suffering on poor Ghanaians.
“We are aware that most traders and ordinary Ghanaians use mobile money wallet as savings account, therefore, any attempt to impose a tax on mobile money transactions will be a tax on savings - a disincentive to save - which should never be encouraged.
“I beg to say that this E-Levy will introduce more inefficiencies in the Ghanaian Economy than ever,” he argued on the floor of Parliament.
The 1.75% tax on electronic financial transactions was proposed in the 2022 budget statement presented before Parliament by the Finance Minister, Ken Ofori-Atta on Wednesday, November 17, 2021.
The Minister explained that the tax measure was to raise approximately GHS 7 billion to support the job creation initiatives, construction of road infrastructure, cyber security, and digital infrastructure.