Since the Mahama Administration announced its intention to eliminate the controversial and often criticised e-levy, along with other existing taxes, there has been a growing discussion and concern among the public and various stakeholders.
Many are advocating that in place of these taxes, there should not be any new taxation policies introduced. This perspective reflects a desire for relief from what is perceived as burdensome taxation and a call for a more favourable economic environment. The conversation continues to evolve as people weigh the implications of tax policies on their daily lives and the broader economy.
To establish a tax system that is both fairer and more efficient, it is essential to consider the replacement of the existing e-levy and other tax measures with alternative options. The current electronic transfer levy, implemented under the Electronic Transfer Levy Act of 2022, imposes a 1% charge on electronic money transfers. This levy can significantly affect citizens’ financial situations, particularly those belonging to low-income brackets who may already be facing economic challenges. As such, reforming this tax structure is vital for alleviating the financial burden on vulnerable populations while promoting a more equitable approach to taxation that supports economic growth and provides necessary public services.
The e-levy has attracted significant criticism for its regressive nature, inefficiency, and detrimental effects on both digital payments and financial inclusion. Many analysts argue that such taxes disproportionately burden lower-income individuals, making it harder for them to access digital financial services. Research and case studies from other nations, particularly Uganda, illustrate these concerns, revealing that similar taxation measures have led to adverse outcomes for vulnerable populations. These negative effects often include reduced usage of digital platforms, increased transaction costs, and a deepening of financial exclusion, which ultimately undermines efforts to promote economic empowerment and equitable access to financial resources.
To alleviate the financial burden on citizens, the government should consider replacing the e-levy with a range of new taxes that are designed to be more equitable. By exploring alternative revenue streams, the government can focus on implementing taxes that specifically target luxury goods, such as high-end cars, designer clothing, and expensive electronics. These taxes would primarily affect wealthier individuals who can afford to spend on such items, ensuring that low-income citizens, who often depend on electronic transactions for their daily needs, are not unfairly impacted. Additionally, introducing a progressive tax system that increases tax rates based on income levels could further ensure that high-income earners contribute a fair share to government revenues, thus promoting greater financial equity across the population. Overall, such a strategy could foster a more sustainable and just revenue system while alleviating the financial strain on the most vulnerable communities.
Additionally, the government must generate sufficient revenue to support its ambitious development agenda. One potential way to achieve this is by replacing the controversial e-levy with a set of new taxes that are more equitable and effective. The adage “no taxation, no development” underscores the fundamental relationship between fiscal policy and progress. Therefore, any new tax measures must be designed with fairness in mind, ensuring that they do not disproportionately impact specific groups of citizens, particularly those who already face economic hardships. This approach can help create a more balanced tax system that promotes growth while ensuring that all citizens contribute to national development in a manner that reflects their financial capabilities.
In conclusion, replacing the e-levy with a diverse array of new taxes marks a significant and progressive advancement toward creating a more equitable and efficient tax system. This shift is vital as it allows us to move away from taxes that have been widely criticised for being burdensome, often described as “vexatious and obnoxious,” to a more balanced structure. A reformed tax framework should prioritise principles of fairness and transparency, ensuring that taxpayers contribute in a manner that reflects their ability to pay.
Additionally, such a system would stimulate development by encouraging investment and economic growth, ultimately benefiting society as a whole. By embracing this change, we can lay the groundwork for a sustainable financial model that supports social equity and nurtures long-term prosperity.
By Peter Kojo Apisawu