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Home Business Banking & Finance

E-levy to promote cash economy and derail digitisation

4 years ago
in Banking & Finance, Business, Editor's pick, highlights, Home, home-news, latest News, Tech-guide, Technology
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E-levy to promote cash economy and derail digitisation

Some experts have expressed reservations about the introduction of the E-Levy. They are of the view that the new levy will promote informality and the cash economy as well as derail digitisation.

One of such experts is Economist Dr Aex Ampaabeng who says, “Most banks/ mobile money transfers are just “money transportation.” Moving money from one person to another with no value creation/device payment involved. Most are transfers to port family members. Taxing such payments can’t be justified.

“I can see more informal businesses accepting cash only, buyers won’t pay additional charges so they will carry cash to shops/markets. Sellers won’t be happy paying taxes on withdrawal. They will also opt for cash, who loses here? Government, for sure.

“This policy will rather enhance informality and it’s a complete opposite of the digitisation agenda. It will be promoting cash and not a cashless economy. It will move traffic from MoMo to cash and could bring job losses. Tax evasion in the informal sector is likely to soar.”

Dr Ampaabeng’s comments come after the Minister for Finance, Ken Ofori-Atta, in presenting the budget2022 on Wednesday, announced the introduction of a new levy called the Electronic Transaction Levy or E-Levy.

The Minister noted the new levy 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.

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According to the Minister, data from the Bank of Ghana indicate that between February 2020 and February 2021 alone, Ghana saw an increase of over 120% in the value of digital transactions compared to 44% for the period February 2019 – February 2020.

Total value of digital transactions for 2020, the Minister further noted, is estimated to be over GHS 500 billion Cedis compared to GH¢78 billion Cedis in 2016.

The E-levy, the Minister noted, will cover mobile money payments, bank transfers, merchant payments and inward remittances at an applicable charge rate of 1.75%.

The E-levy is a new tax measure that will be applied to only the originator of a transaction on an electronic platform. Electronic platforms include the following; fintech platforms, online banking and momo platforms.

Information available to norvanreports.com shows that the levy will affect the following transactions only;

  • Mobile Money Transfers: sending money from your wallet to another person using mobile money
  • Mobile Money Merchant Payments:  when you pay for a service or a product from a merchant using your mobile money account
  • 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.
  • E-Commerce/Online Payments: the E-LEVY will be charged to the customer for payments for goods and or services.

Source: Norvanreports
Tags: Covid-19COVID-19 pandemicE-LevyE-levy to promote cash economy and derail digitisationelectronic paymentsghanamomoMoMo overtakes all payment platforms in GhanaNigeriaPaymentsWorld Bank
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