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E-Levy: Minority Leader wants rate reduced from 1.75% to 1%

4 years ago
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Haruna Iddrisu - NorvanReports

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E-Levy: Minority Leader wants rate reduced from 1.75% to 1%

Leader of the Minority Caucus in Parliament, Haruna Iddrisu, has called on government to reduce the charge rate of 1.75 percent for the yet to be implemented electronic transactions levy by 0.75 percentage points.

According to the legislator, the charge rate for the E-Levy should be 1 percent rather than the proposed 1.75 percent charge rate.

Additionally, the lawmaker is calling on government to increase the exemption threshold from GHS 100 to GHS 300.

Making the call while delivering a speech at the launch of the 10th anniversary of Ghana Chamber of Telecommunications on Thursday, December 2, 2021, Mr Iddrisu noted the GHS300 threshold instead of GHS100 will prevent financial exclusion.

“The GHS 300 threshold instead of GHS 100 will prevent financial exclusion because many Ghanaians transact more than GHS 100 in a day, and these monies may not necessarily be theirs, so it will not be fair to tax them on those moneys [sic],” he noted.

The announcement of the 1.75 percent E-levy on mobile money and all electronic transactions in the country by the Finance Minister have resulted in a huge public outcry with the Minority in Parliament rejecting the 2022 budget because of the levy.

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Aside the Minority, industry groups such as the Ghana Chamber of Telecommunications, eCommerce Association of Ghana, Association of Ghanaian Industries and others have kicked against the levy saying it as ill-timed and counterproductive to the industry and to government’s own financial inclusion agenda.

Read Also: OMCs call for reduction in fuel taxes 

But according to the the Finance Minister, the introduction of the E-Levy forms part of a number of measures to widen the tax net to ensure all Ghanaians pay their fair share of taxes.

The Minister during his presentation of the 2022 budget and assigning reasons for the levy, noted the outbreak of the Covid-19 pandemic contributed to the acceleration of digitalization and its usage in Ghana, and that led to over 120 per cent increase in the value of digital transactions in the country as of February 2021.

“Total value of transactions for 2020 was estimated to be over GHS500 billion compared to GH¢78 billion in 2016 just 5 years ago, while total mobile money
subscribers and active mobile money users have grown by an average rate of 18% and 16% respectively between 2016 and 2019.

“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.

“Electronic transactions covering mobile money payments, bank transfers, merchant payments and inward remittances will be charged at an applicable rate of 1.75%, which shall be borne by the sender except inward remittances, which will be borne by the recipient,” he said.

The Minister however noted that to safeguard efforts being made to enhance financial inclusion and protect the vulnerable, all transactions that add up to GHS 100 or less per day (which is approximately GHS 3000 per month per person) will be exempt from the E-Levy.

Meanwhile, it is still not clear how the 1.75% e-levy will be implemented seeing that there is already a 1% service fee on all mobile money and several other electronic transactions.

The question therefore still remains whether the 1.75% will be an addition to the existing 1% to make the fee 2.75% or it will be calculated on the just the 1% fee.

Tags: COVID-19 pandemicE-Levy: Minority Leader wants rate reduced from 1.75% to 1%ghanaMinority Caucus in Parliament
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