Ghanaians oppose ‘MoMo tax’ as gov’t expects to mobilise GHC6.5bn in 2022
Adnan Adams Mohammed
Several Ghanaians have registered their displeasure at the government tax policies on electronic transactions basically on Mobile Money, Fintechs, bank transfers transactions christened as E-levy.
The majority of Ghanaians are particularly against the inclusion of mobile money transactions which has currently made movement of money very fast, reliable and common to the ordinary Ghanaians in every part of the country. These momo services, financial experts have touted as the most the effective and efficient was to achieve the cashless economy efforts of government.
Government in its 2022 budget statement and economic policy decided to impose a 1.75 percent levy on all electronic transactions. The Finance Minister, Ken Ofori-Atta, who disclosed this during the presentation of the 2021 Budget Statement, said the levy is aimed at enhancing financial inclusion and protecting the vulnerable. However, the Minority in Parliament has vowed to join the several Ghanaians opposing the ‘MoMo’ tax to stop its implementation.
“The new levy will only increase hardship and compromise inward remittance”, the Ranking Member on the Finance Committee of Parliament, Cassiel Ato Forson posited. “The Minority will thus stand by Ghanaians in opposing the momo tax.”
The government expects to mobilise about GH¢6.5 billion from the newly introduced E-Levy next year, the Minister of State at the Ministry of Finance, Charles Adu Boahen noted.
The levy imposes a 1.75 per cent tax on mobile money and other electronic (E) transactions that exceed GH¢100 per customer per day.
Mr Boahen said that the GH¢100 limit exempted about 40 per cent of patrons of electronic transactions, particularly MOMO.
He said data on E-transactions showed that about 40 per cent of patrons either sent or receive less than GH¢100 per day.
Majority of these are the economically disadvantaged, hence the reason to exempt them from the tax, the minister said.
At GH¢6.5 billion, the target could prove crucial for the government’s revenue projections next year.
Faced by dwindling revenues, strong debt build up and waning investor confidence, the government said in the 2022 Budget that it aimed to grow domestic revenue by 44 per cent next year, the highest annual growth rate in recent times.
Mr Ofori-Atta said the E-Levy was one of the strategies by the government to mobilise revenue for development as part of a burden sharing strategy.
MOMO transactions have been enjoying tremendous growth in recent times, with their vending points eclipsing bank branches.
Mr Ofori-Atta said MOMO transactions hit GH¢500 billion last year, up from GH¢257 billion in 2019 and GH¢78 billion in 2016.
“Mr Speaker, following this observation, there exists significant potential to increase tax revenues by bringing into the tax bracket, transactions that could be best defined as being undertaken in the “shadow economy,’” Mr Ofori-Atta told Parliament.
The government says portions of revenue collected from the levy will be used to support entrepreneurship, youth employment, cybersecurity, digital, and road infrastructure among others.
It is the expectation of the government, that the implementation of the new policy will come into force effective January 1, 2022, if the appropriation is passed.
“Government will work with all industry partners to ensure that their systems and payment platforms are configured to implement the policy”, the Finance Minister said.
He said the total value of transactions for 2020 was estimated to be over GHS 500 billion as compared to GH¢78 billion in 2016, while total mobile money subscribers and active mobile money users have grown by an average rate of 18% and 16% respectively between 2016 and 2019.
Apparently, in August 2020, Vice-President Dr. Mahamudu Bawumia granted an interview to Accra-based Peace FM’s morning show Kokrokoo where he disagreed with the suggestion that mobile money transactions should be taxed.
He told show host Kwame Sefa Kayi: “I don’t think Mobile Money should be taxed because most of the people who use the service are poor people so if you put more taxes on it they will suffer”.
This follows government’s recent introduction of a tax on MoMo transactions.
The situation has caused some Ghanaians on social media to remind the Vice-President of his own words.