E-Levy cannot stop Ghanaians from using MoMo – Dalex Finance CEO
Chief Executive Officer (CEO) of Dalex Finance, Ken Thompson, has in a different opinion stated that there is nothing wrong with Ghanaians paying the controversial Electronic Transaction Levy (E-Levy) pointing out, concerns expressed mostly by economic analysts in the country of the newly introduced Levy (E-Levy) reducing usage of mobile money and other digital platforms for money transactions is not attainable.
Mr. Thompson who has for the past 5 years trumpeted the fact that “Ghana is Broke” pointed out that even though the calls to widen the tax net, is a good one, that cannot be achieved in the short term by the government but Ghana needs to come up with measures that will help deal with the deficit, hence the introduction of the levy which is to help raise the needed revenue which he is of the stong opinion will not affect or reduce momo and online transactions within the banking system.
Several economic analysts on the back of the introduction of the E-Levy in the 2022 budget by the government, have warned of the derailment of the government’s financial inclusion agenda and the overall digitization agenda adding the move will promote a cash economy rather than a cashless one.
According to the analysts, the E-Levy will reduce demand for and usage of the widely accepted mobile money platform as well as other digital platforms such as the POS, GIP instant pay, among others in the country.
Opinions expressed by some analyst is supported by a survey conducted by the United Nations Capital Development Fund (UNCDF) in Uganda which shows that 38% of Ugandans – in the short term – used less mobile money after a 0.5% tax imposition on the service.
But reacting to the assertions made in an exclusive interview with NorvanReports, Mr Thompson who is of a different opinion, stating that he doubts people will actually move away from the usage of the platform because of the imposition of the tax.
“I have heard arguments for and against the E-Levy with some saying it will promote a cash economy, but I doubt it will.
“If you expect me to carry cash I won’t carry cash, we are all locked into it. What we have to argue about is how do we advocate for the system to be less punitive or softens the blow to certain category of people of the economy as this I must admit is a burden on the poor.“
“But moving away from MoMo, I doubt it very much,” he told NorvanReports, however, adding that the levy should be a short-term measure by the government for raising tax revenue to pay for its debts.
The E-Levy, the Finance Minister noted on the day of the budget presentation, is occasioned by the surge in digital transactions as a result of the Covid-19 pandemic and the need to widen the tax net and rope in the informal sector.
Total value of digital transactions for 2020, the Minister noted, is estimated to be over GHS 500 billion Cedis compared to GH¢78 billion Cedis in 2016.
The E-levy, the Minister further noted, will cover mobile money payments, bank transfers, merchant payments and inward remittances at an applicable charge rate of 1.75%.
E-Levy not to affect transfer of funds between bank accounts, MoMo accounts
The E-Levy, according to the Finance Ministry, transfer of funds between accounts belonging to an individual.
This implies that the E-levy charge is not applicable to a transfer of funds between two mobile money accounts or bank accounts owned by the same person.
Similarly, transactions involving bank transfers and cheques are exempted from the 1.75 percent E-levy charge.
“Bank transfers and cheques – bank transfers and cheques will be exempt from the E-levy; Daily Free Limit – every taxpayer will be able to send up to GHS100 / day in exempt transfers that they can do; Transfers between accounts your own accounts – if you are moving money between your own accounts (i.e., of the same taxpayer) then you will not be charged the E-LEVY,” explained a document on the implementation of the E-levy.
With regards to the transactions to be affected by the E-Levy during its implementation, they include; Mobile Money Merchant Payments: when you pay for a service or a product from a merchant using your mobile money account; Mobile Money Transfers: sending money from your wallet to another person using mobile money; Merchant Payments Using POS or QR: transactions at merchant locations that are done using a POS, QR or alternative payment channel will be assessed the levy; and E-Commerce/Online Payments: the E-LEVY will be charged to the customer for payments for goods and or services.
GRA ready to implement E-Levy
The Commissioner-General of the Ghana Revenue Authority (GRA), Reverend Ammishaddai Owusu-Amoah, has said the GRA stands ready to implement the newly introduced electronic transaction levy (E-Levy).
According to him, while Parliament is going through the necessary legislation processes for the introduction of the levy, the GRA is also looking at ways to successfully execute the implementation of the levy.
Adding that, there are a lot of things that have to be done [by GRA] prior to the implementation of the E-Levy.
“There are a lot of things to be done before the commissioning of the E-Levy and fortunately for me I have seen it [E-Levy] being collected in other countries. So while Parliament is going through the legislation processes, we are also looking at ways to execute it successfully.
“We will be bringing it alongside e-commerce and e-gaming as part of measures to growing revenue for the nation, the policies are already there, just that there are some small changes we need to do before we implement them.
“Our key role is to implement the policy and to ensure that we are able to rake in the necessary revenue for the development of the company,” he stated speaking during an interview.
The E-Levy, per estimates is expected to rake in some GHS 7 billion in revenue for the government.
No private company to collect E-Levy – Finance Ministry
Meanwhile, the Ministry of Finance has debunked claims that a private company has been given the contract to collect the proposed electronic transaction levy (E-levy).
The Ministry’s assertion comes after publications that suggested that a private company has been awarded a contract to collect the E-Levy.
Per a statement released by the Ministry, the Ghana Revenue Authority is the state agency that has been mandated to collect the levy on mobile money transactions, inward remittances and ATM withdrawals.
“The attention of the Ministry of Finance has been drawn to social media publications claiming that government has dropped the allocation of GHS 241,933,000 for the Electronic Transaction Levy Services in the 2022 Budget and it will, therefore, not appear in the Appropriations Bill.
“Additionally, the Ministry is aware of allegations making rounds that a private company has been awarded a contract to collect the E-Levy. Another allegation is that the services of the said private company have now been abrogated.
“The Ministry of Finance wish to state that these allegations are all untrue.
“The Ghana Revenue Authority (GRA) is the state agency mandated to provide for the collection services, the cost of which shall not exceed the standard of revenue mobilization as has always been the practice. This standard indicative cost is what is outlined in the budget. GRA will manage all discussions to ensure full deployment of their current platforms and resources for the collection of the E-Levy,” read parts of the statement.
