News Guide Africa

Tag: Electronic transaction levy

  • E-Levy for loans: Akufo-Addo ministers caught deceiving Ghanaians

    E-Levy for loans: Akufo-Addo ministers caught deceiving Ghanaians

    Adnan Adams Mohammed

    Key ministers in the current Akufo-Addo/Bawumia government are on deliberate spree of deceit to hide the truth about the initiation of the Electronic Transaction Levy (E-Levy).

    Within a period of a week, two ministers have contradicted themselves exposing how deceitful the government is with regards to the E-Levy policy. As a Deputy Minister for Finance, a week ago denied E-Levy wass going to be used by government as collateral to access additional loans.

    In a categorical statement to deny the rumour by the minority in Parliament, Mr. John Ampontuah Kumah stated; “It is not true that the government is going to collateralize e-levy and all that, we are going to have enough revenues to be able to properly deal with the country’s development challenges, for example, to pay contractors working on our roads,” he stated.

    Speaking to journalists in Kumasi, Mr Kumah described those assertions as lies and malicious propaganda being peddled by people opposed to the introduction of the levy to create disaffection for the government.

    Apparently, as shocking as it was and it will be to the NPP government, the Minister for Roads and Highways revealed on the floor of Parliament that, the government may securitise proceeds from the yet-to-be approved e-levy to raise revenue to construct more roads.

    “Government is looking forward to the passage of the e-levy that will bring in greater revenue that will be securitised and then used to raise bonds if possible”, in answering questions in Parliament on Friday, Kwasi Amoako-Atta said

    “The government in its wisdom has proposed the passage of the e-levy to bring in more revenue to build the road infrastructure of our country for all of us,” he also said.

    Responding to the Minister’s comments in parliament, MP for Cape Coast South, Kweku Ricketts Hagan, said the Roads Minister has revealed the government’s true intentions for the controversial levy.

    “As they have factored in the E-levy, the government will still be borrowing up until 2025, which is what they have in the budget.”

    “They have demonstrated here today that they actually want the e-levy to go and do more borrowing,” he added.

    Mr. Hagan stressed that the government would have to answer for its handling of the e-levy

    “We want them to understand that they have to be accountable for all the things that they are doing. If not today, it will be tomorrow.”

    Ghana’s total public debt stock stands at GHs 332.4 billion, as of May 2021.

    That figure brought Ghana’s debt to Gross Domestic Product ratio to 76.6 percent.

    The e-levy seeks to impose a 1.75 per cent levy on some electronic transactions such as mobile money transfers from accounts on one same Electronic Money Issuers (EMI), Mobile Money transfers from accounts on one EMI to a recipient on another EMI and transfers from bank accounts to mobile money accounts.

    Also transfers from mobile money accounts to bank accounts and bank transfers originating from a bank account belonging to an individual will also attract the levy.

    However, the announcement of the policy in the 2022 budget by the Finance Minister, had met stiff opposition, especially from the Minority in Parliament, and other groups and individuals.

    They argue that the new tax policy if allowed to be implemented will bring untold hardships on Ghanaians who are already suffering severe economic hardships.

  • GRA Board Chair objects Ofori-Atta on ‘Ghana is broke’ excuse 

    GRA Board Chair objects Ofori-Atta on ‘Ghana is broke’ excuse 

    Adnan Adams Mohammed

    The immediate past Board Chair of Ghana Revenue Authority has objected to an official comment from the Finance Minister purporting that the country has no financial resources to pursue its budgetary allocations and developmental agenda.

    Prof Stephen Adei in his reaction to the minister’s comment expertly indicated that, despite the current challenges the economy is going through, Ghana cannot be said to be a ‘broke nation’ but in a short-term economic crisis. 

    In his relentless effort to justify the need for Ghanaians to accept the passage of the Electronic Transaction Levy (E-Levy) into law despite stiff opposition, Ken Ofori-Atta speaking at a town hall meeting last week in the Upper West regional capital, said, although the demand for salary increment by public sector workers is legitimate, the country has no money. Indicating that there is the need to generate more money because the country has no money, thus the need for all to support government’s proposed tax on electronic transactions (E-levy).

    “It is a short-term economic crisis, nobody should deny that one. It is a fact”, the former Rector of the Ghana Institute of Management and Public Administration (GIMPA) said in an interview last week.

    “I think we have a good country with a good future but we have a short-term challenge; it is quite obvious. We know that at the end of last year, the fiscal deficit was 12.1 per cent, inflation has started climbing up to 12.6 per cent; the currency, which was quite stable – in fact, two years ago, we were the best-performing currency in Africa; I think – is now depreciating very fast; I think the latest, even the official one is about 6.8 per cent [at the bureau]; petrol prices have almost doubled, recently there was a Fitch downgrading of the rating of Ghana to B-.”

    However, he warned: “If we don’t manage it well, it can lead us into trouble but I don’t think that we can say that the country is broke”.

    “Let me quote former Senior Minister Yaw Osafo Marfo; when he was a Minister of Finance, one day he said, ‘Na who cause am?’”

    Apparently, Mr Ofori Atta justified his ‘Ghana is broke’ excuse noting that; “I look at teachers and civil servants for example, and I will be the first to admit that the salaries are indecent, nobody will argue with that. At the same time, it is 60 per cent of all the revenue we collect from 700,000 people [go into salary payment,] that is also a fact.

    “So yes, there is a legitimate demand for more and there is a legitimate reality that there is no money. So what do we do as a society? Then you ask me to give you more salary, which is fine, then I say, but it is your colleague civil servants who collect the money, so how can you responsible for collecting the money, not collect it and then tell me to give you the money. That will be another issue.”

    A few weeks ago, international rating agency (Moody’s) downgraded Ghana’s long-term issuer and senior unsecured debt ratings to Caa1 from B3 and changed the outlook to stable from negative.

    Moody’s said on Friday, 4 February 2022: “The downgrade to Caa1 reflects the increasingly difficult task the government faces addressing its intertwined liquidity and debt challenges”.

    “Weak revenue generation constrains government’s budget flexibility, and tight funding conditions on international markets have forced the government to rely on costly debt with shorter maturity”, Moody’s noted.

    Moody’s said its projection shows that more than half of the country’s revenue will go into the payment of interests for the next few years, and proposals by the government to fix the challenge does not seem to be feasible, especially given the fragile post-pandemic environment.

    “While Ghana’s external buffers and moderate external debt amortisation schedule in the next few years afford the government a window of opportunity to deliver on its strategy, balance of payments pressures will build up the longer government’s large financing requirements have to rely on domestic sources,” it noted.

    Apart from the long-term issuer and senior unsecured debt downgrade, Moody’s also downgraded Ghana’s bond enhanced by a partial guarantee from the International Development Association (IDA, Aaa stable) to B3 from B1, “reflecting a blended expected loss now consistent with a one-notch uplift on the issuer rating.”

    It also lowered Ghana’s local currency (LC) and foreign currency (FC) country ceiling to respectively B1 and B2 from Ba3 and B1.

    “Non-diversifiable risks are appropriately captured in an LC ceiling three notches above the sovereign rating, taking into account relatively predictable institutions and government actions, low domestic political, and geopolitical risk; balanced against a large government footprint in the economy and the financial system and current account deficits,” Moody’s said in its report.

    About a month before the Moody’s rating, Fitch also downgraded Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B-’ from ‘B’ with a negative outlook.