May 24, 2022

E-Levy saga: Tax analyst advises government to withdraw the levy, fine-tune and relaunch it after consultations

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Dr. Abdallah Ali-Nakyea, a tax analyst has said that the government’s proposed 1.75% tax on electronic financial transactions was not well-thought through before its announcement at the parliament.

According to him, tax policymaking is a process and should not be rushed.

He urged the government to withdraw the proposition, consult all stakeholders and return with a more comprehensive and acceptable one.

Speaking in an interview, Dr. Abdallah Ali-Nakyea said “these are early days yet. For me, that has been our challenge with tax policymaking in the country. Tax-policy making is a process and not an event, so when you come out with such a policy, on the face of it is stated that there will be a 1.75% e-levy on the value. That is the simple interpretation anyone will give.”

“There are so many reactions to this that tell me that this is not a policy that has been well thought through. It is not new in the sense that two years ago it started popping up. The Communication Ministry began giving signals that we want to look at that sector. I thought that we should be having a stakeholder engagement and consultation by now, and then we can fine-tune it. Just as was done with VAT, it was withdrawn after the Kumipreko demonstration, a stakeholder consultation was held after which it was relaunched. That is exactly what I think should be done in this case.”

“I think it should be withdrawn, deliberated on, and relaunched. Can we take our time to determine who is to pay the tax, which transactions should be covered, how we are going to collect it and account for it, after that we need to audit to ensure that all that has to be collected has been done? How do we go through all these? This is what a tax policy project entails. Then we will all be certain.”

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 revenue to support the job creation initiatives, construction of road infrastructure, cyber security, and digital infrastructure.

Ken Ofori-Atta was hopeful that the proposal will come into full force from February 2022.

Various stakeholders including those in the telecommunications sector have also raised concerns about the policy

The Minority caucus in Parliament has also vowed to kick against the proposal.

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