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Pressure group, OccupyGhana has outlined three conditions that government should strictly adhere to should it successfully introduce the Electronic Transaction Levy (E-levy).
According to the Group, the government must be transparent in its disbursement of the country’s funds.
OccupyGhana also demanded that an “accountability regime that requires government, at least, to publish the revenue from the E-Levy and details of its disbursement on a quarterly basis” should be introduced.
The Group further noted that it wants to experience a renewed commitment in a government move to recover all state money declared to have been misused by the Auditor-General.
OccupyGhana stressed that the E-levy Bill must “come with clear and satisfying answers to these concerns because the e-levy will be meaningless unless it is linked with
(1) the total implementation of our income tax laws,
(2) absolute commitment to recovering our misused monies, and
(3) complete fiscal transparency and accountability.”
The controversial E-Levy was proposed by the government in the 2022 Budget as an innovative way to rake in more revenue for the government.
It is a 1.75% charge on all electronic transactions that are more than GH¢100 on a daily basis.
Although it has been rejected by economists and the Minority in Parliament, the government maintains that the levy will increase the tax net.
The tax policy is estimated to generate some ¢6.9 billion annually, according to the Finance Ministry.
Find below the full statement:
OCCUPYGHANA PRESS STATEMENT ON PROPOSED E-LEVY
OccupyGhana has keenly followed the debate on the proposed Electronic Transaction Levy (E-Levy). If this must be implemented, it must be subject to three strict conditions:
- full implementation of income tax laws and an active roadmap that will double the number of income taxpayers yearly, until all eligible tax income payers are brought within the income tax net,
- a statutorily enforced fiscal transparency and accountability regime that requires Government, at least, to publish the revenue from the E-Levy and details of its disbursement on a quarterly basis, and
- a renewed commitment by Government to recover all monies declared by the Auditor-General to have been misused.
THE ANAEMIC TAX SYSTEM
1. Income taxes are meant to finance development, with indirect taxes shoring up the revenue from income taxes. Yet, in Ghana, out of an estimated eligible taxpayer population of 10 million, information available on the African Tax Administration Forum (ATAF) portal, shows that in 2020, the total number of actual tax income payers was a measly 2.3 million.
2. This state of affairs where an estimated 75% of potential income tax payers do not pay, is unsustainable and a clear sign of failed political leadership by successive Governments. For instance, although in 2015 Parliament passed the modified tax provisions to draw the informal sector into the income tax net, Governments since then have inexplicably failed to apply the law.
3. Our Governments refuse to do the heavy lifting required to have an effective income tax system that draws in the informal sector, and repeatedly taken the easier path: indirect taxation. In Ghana today, the slew of indirect taxes includes, (i) Value Added Tax, (ii) National Health Insurance Levy, (iii) Ghana Education Trust Fund Levy, (iv) Covid-19 Health Recovery Levy, (v) Communication Service Tax, (vi) Import Duty, (vii) Excise Duty, (viii) ECOWAS Levy, (ix) EDAIF Levy, (x) Stamp Duty, (xi) ESLA Levy, (xii) Road Fund Levy, (xiii) TOR Recovery Levy, (xiv) GET Fund Levy, (xv) Price Stabilisation Levy, (xvi) Energy Fund Levy, (xvii) Special Petroleum Tax, (xviii) Energy Debt Recovery Levy, (xix) Sanitation and Pollution Levy, and (xx) Tourism Levy.
4. And several of these are poorly designed and badly administered as evidenced in the sham benchmark value rebate that had been illegally applied to all imports, and which Government appears not to have the guts to repeal. We are literally bleeding money and subsidising the lifestyles of importers.
5. Thus the broader picture should be how we fix the anaemic income tax system, which might go a long way to render a lot of these burdensome indirect taxes redundant.
6. Against this background, the E-Levy might simply paper over the deep cracks, especially where the current, proposed E-Levy structure itself raises concerns such as what the daily zero-rated threshold should be, and how to deal with the inherent multiple taxation of the same funds, simply because they were moved around different ‘accounts.’
FAILURE TO RECOVER LOST STATE MONEY
7. While Government is focused on the revenue side, we see precious little effort in reining in the expenditure side and, critically, recovering monies lost to the state. Government (which is demanding more traxes) and its supposedly independent Auditor-General have all but abandoned the constitutional demand that persons found culpable for misusing Government funds be surcharged and made to pay.
8. For instance, the 2020 Auditor-General’s report shows that fiscal/financial irregularities amounted to a record 12.85 billion cedis, approximately 85% of which represents ‘trade debtors, staff debtors and outstanding loans.’ Simply, Government and its agents gave out credit facilities, and then neglected to collect the debts for criminally cringeworthy reasons that the Auditor-General sets out, such as, no debt collection policies or credit controls, indifference, improper record-keeping and non-documentation of agreements, and non-compliance with rules and regulations.
9. Although the Constitution and the Supreme Court decision in OCCUPYGHANA v. ATTORNEY-GENERAL demands that all such culpable officials and ‘beneficiaries’ are surcharged, the Auditor-General has reverted to merely making farcical and impotent ‘recommendations,’ while Government and Parliament are only too happy to play along with this pantomime.
10. It is therefore not too surprising that both the Auditor-General and Attorney-General have refused to answer our repeated requests for information on these matters. This coordinated silence is revealing, because if the Auditor-General and Attorney-General had been doing their work, they would have been happy to share that information with Ghanaians.
11. It is difficult to reconcile this overall Government attitude with a demand for new taxes.
OUR SUGGESTIONS
12. To increase tax revenue, we suggest the following:
(1) improve taxpayer education to improve voluntary tax compliance;
(2) implement the Electronic Point of Sale devices to verify sales data and VAT collections;
(3) increase the corporate income base by passing the Tax Exemptions Bill to reduce tax exemptions;
(4) provide the framework to properly implement property taxation, property being a better-targeted proxy of income than momo transactions;
(5) improve the efficiency and effectiveness of tax administration;
(6) repeal the benchmark values for imported goods for customs purposes;
(7) implement the modified taxation system where the informal sector pays a standard 3% rate on turnover as total tax liability;
(8) plug the loopholes and leakages of revenue; and
(9) recover funds lost and detailed in the Auditor-General’s reports.
13. Further, it is time for proper fiscal transparency and fiscal accountability. After several years of fiscal inefficiencies, no Government should use Ghana’s low tax revenue-GDP ratio as justification to impose a tax like the E-Levy, without a social contract that is based on fiscal transparency and accountability. Thus, if the E-Levy is approved by Parliament, that legislation must also require Government to submit itself to a fiscally transparent and accountable regime where in every quarter of the year, Government will at the minimum, publish the revenue from the E-Levy and details of how the revenue was disbursed.
14. OUR POSITION: Any reintroduction of the E-Levy bill to Parliament must come with clear and satisfying answers to these concerns because THE E-LEVY WILL BE MEANINGLESS UNLESS IT IS LINKED WITH (1) THE TOTAL IMPLEMENTATION OF OUR INCOME TAX LAWS, (2) ABSOLUTE COMMITMENT TO RECOVERING OUR MISUSED MONIES, AND (3) COMPLETE FISCAL TRANSPARENCY AND ACCOUNTABILITY.
In the service of God and Country.
