As Ghana’s economy is torn in the flesh of either passing and implementing the Electronic Transaction Levy or going to the IMF for a bailout, many finance and economic experts have shared their views on the way-forward in savaging the collapsing economy.
The Chief Executive Officer of Dalex Finance wants the government to do a proper introspection of its current revenue generation strategies. The finance expert insists that raising funds through the controversial Electronic Transaction Levy and calls for Ghana to return to the International Monetary Fund (IMF) is a non-starter and must be aborted without any further delay.
The finance expert wants the government to consider other domestic means to shore up revenues other than plans regarding the E-levy and a fallback to IMF. He indicated that, government must restrategize and raise revenue through a more robust property rate collection system.
“E-levy will hurt the business environment, financial support from the IMF on the other will only worsen Ghana’s ailing economy”, Kenneth Thompson posited in a TV discussion last week.
“Let’s go for property tax with a vengeance. Let’s set up courts that collect the tax 24/7, give bailiffs more powers to collect it, and set targets for the GRA and that’s how we can raise the revenue. It’s very important, and if I were the Finance Minister, I will go after this tax with a vengeance. So for me, IMF is not the solution because what will they tell us that we do not know already.”
However, finance experts and economists have shared varied opinions on the E-levy or IMF bailout. A former Finance Minister, Seth Terkper, has called on the government to heed to advise by stakeholders to return to the IMF for a bailout to finance the country’s deficit instead of taxing Ghanaians through the electronic transfer levy. He believes the government cannot rake in the needed amount through the levy to help close the country’s budget deficit.
Mr Terkper is worried that, the country’s problems of being locked out of the international capital market, among others, will compound in the coming years if government remains adamant and does not take decisive action immediately.
“Our issue is expenditure. Are we able to finance the programs which we have on the table? Even in the medium-term budget, from 2023 to 2025, you will see E-levy running through it. Even if it has been factored and that is what we are presenting as home-grown, are we not going to borrow? All your revenue from now through that period, if you don’t do any major restructuring, it is only going to pay compensation and interests,” the former minister shared his expert opinion.
Apparently, the government has reaffirmed its decision not to return to the IMF for support. The Finance Minister, Ken Ofori-Atta believes, going to the IMF again will have dire economic implications. He indicated that the e-levy will give Ghanaians more of a moral right to demand their due from the government. The minister sees the e-levy as a better step towards “the Ghanaian dream.”
“Once you pay taxes, you will have the moral authority to be able to require certain performance from the political elite, and that is what we should be doing”, Mr Ofori-Atta convincingly noted.
“Our call to you is to let your MPs know that beyond all of this the Ghana dream will require that we are all part of this burden-sharing…to build our country,” the minister said.
The government has also defended the levy as being necessary to widen the tax net. The government expects the levy to provide an extra GH¢ 6.9 billion to execute developmental projects in 2022. According to the budget, up to 0.25 percentage points of the 1.75 percent e-transaction levy or 16.7 percent of the yield from the levy, should be used to support road infrastructure development.
Ten percent of the 0.25 percentage points, i.e. 1.67% of the yield from the levy, would be dedicated to improvements in public transportation, including the purchase of buses. Mr. Ofori-Atta further said his government, which has been criticised for prolificacy and corruption, would do its “best to restrain leakages.”
“We also looked at our fiscal consolidation, in which we then said that we were going to try and reduce our deficit in a way that enables us to get a lot more resources for that.”
But, the Minority in Parliament, which sees the E-Levy as a fleece on Ghanaians since the telecommunication companies are already taxing the people, justify that capital cannot be taxed or one item cannot be taxed twice. The minority thinks the GHC6 .9 billion revenue that the government intends to get can be raised through other means without necessarily burdening the people who are already impoverished. Since its introduction in Parliament, the House has not been on the same pace, causing the brawl that happened the night before the House was forced to recess.
After turning deaf ears to the minority on consulting the public and other stakeholders, the government finally decided to hold a Town Hall Meetings to sensitize Ghanaians and take feedback on the levy. According to a former Deputy Minister of Finance, Cassiel Ato Forson, the E-levy can be termed as the “most unpopular tax ever introduced in Ghana” with all the hullabaloo surrounding it.
“The fact is, IMF today, will give Ghana up to US$3 billion. In fact, Dr. Assibey was overly generous when he said the E-levy is going to give us GHC5 billion, he is making an assumption based on government official numbers that they’re going to get GHC6.9 billion. The Telecos have confirmed that the maximum government can get from this levy if they are successful, is GHC3 billion. Already, first month is gone, second is about to go, this is a bill that has received public bashing ever. It is the most unpopular tax policy ever in the history of this country.”
He is in support of the government calling on the International Monetary Fund (IMF) to assist the country solve its economic challenges. Mr. Forson said, the government will not be able to bring the economy back to it’s’ feet with just the estimated returns from the levy. Mr. Forson argued that Ghana’s economic situation will deteriorate further if the government fails to seek financial support from the IMF.
“Our debt levels are not sustainable. Our credit levels are going down. If care is not taken, Moody’s is going to downgrade Ghana further. The very IMF that they are running away from is the same institution that gave us the 2 billion US dollars in the space of two months. We are surviving as a country because of the same IMF. The government should not think that implementing the e-levy will solve our problems. The debt levels are so high.”
A former Chair of the Finance Committee of Parliament, Dr. Mark Assibey Yeboah, is urging the government to reconsider its decision not to go back to the International Monetary Fund (IMF) in the face of the country’s dwindling revenues.
The former New Patriotic Party Member of Parliament for New Juaben South and a member of the current governing party maintains that, the government’s insistence on passing the E-Levy to shore up its revenue target is not right, given the existential economic challenges.
His position which is against his party’s decision of not returning to the IMF for financial support but will look at prioritizing domestic revenue generation through the implementation of the E-Levy, has generated a lot of concerns and debate.
By Adnan Adams Mohammed