Lawmakers have commenced debating on the 2022 budget statement that was read by Finance Minister Ken Ofori-Atta and legislator of the North Tongu Constituency Samuel Okudzeto Ablakwa did not mince words as he stated that the minority caucus will not endorse the new taxes the government introduced.
He deemed the new tax as draconian ones hence the minority’s decision not to buy into the government’s idea.
In a tweet after contributing to a debate on the budget statement in Parliament on Tuesday, November 23, he said “I sent a clear, loud and unambiguous message to the Finance Minister during Parliament’s debate on the 2022 Budget.
“The NDC caucus in Parliament isn’t available to be convinced by him to support govt’s draconian taxes. We were sent to Parliament by the Ghanaian people not him.”
The controversy is surrounding the new levy introduced by the Finance Minister to tax all electronic transactions to widen the tax net to also involve the informal sector.
“It is becoming clear there exists enormous potential to increase tax revenues by bringing into the tax bracket, transactions that could be best defined as being undertaken in the ‘informal economy,” Mr Ofori-Atta observed on Wednesday, November 17 as he presented the 2022 budget statement in Parliament.
“After considerable deliberations, 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’.”
He further backed the reason for the introduction of the new E-levy stating that it will be a 1.75 per cent charge on all electronic transactions covering mobile money payments, bank transfers, merchant payments and inward remittances to be borne by the sender except inward remittances, which will be borne by the recipient.
This will, however, not affect transactions that add up to GH¢100 or less per day.
“A portion of the proceeds from the E-Levy will be used to support entrepreneurship, youth employment, cyber security, digital and road infrastructure among others.”
This new levy is scheduled to start Saturday, January 1, 2022, if approved by Parliament.
In 2020, total value of transactions was estimated to be over GH¢500 million with mobile money subscribers and users growing by 16 per cent in 2019.
A report from the Bank of Ghana points to the fact that Ghana saw an increase of over 120 per cent in the value of digital transactions between February 2020 and February 2021 compared to 44 per cent for the period February 2019 to February 2020 due to the convenience they offer.
This was definitely heightened by the advent of Covid-19, especially during the lockdown.