Former Minister for Finance, Seth Emmanuel Terkper has reiterated that he is still against the government’s proposed electronic transaction levy ( e-levy).
Responding to some media reports allegedly stating that he endorses the controversial levy, Mr. Terkper said the e-levy is a nuisance tax that discriminates against persons who save on electronic ‘wallets’, instead of banks.
To him, the tax “offends the principle of fairness in taxation.”
Below is his statement;
Statement by Hon. Seth Terkper on e-levy
Accra, January 26, 2022
My attention has been drawn to publications and news reports alleging my endorsement of the e-levy proposal in the 2022 budget statement.
I wish to state that my position, including a presentation I made at PFM-Tax Africa event 2 day ago
and reported by various national media, has been consistent on the issue.
1. Ghana’s Tax Structure: In the four decades since the launch of the Economic Recovery Programme or Structural Adjustment Programme (ERP/SAP) in 1983, Ghana has NOT had a tax instrument that taxes savings and investments.
2. Taxing savings and investment: In a recent tweet I quizzed: what difference does it make if Ghanaians kept their savings (which may have attracted taxes already) under their pillows, or in a bank or in a “e-wallet” (purse) on their phones?
In the case of the pillow and bank, they do not pay a tax until the money withdrawn is (a) used to set up a business to turn a profit (income tax) or (b) buy consumer goods and services and pay, mainly, VAT, excise and tariff or customs duty. Why then tax the equivalent savings taken from the phone ‘wallet’ before one uses it to set up a business and make profit or buy goods to attract the VAT etc?
3. E-levy: “most nuisance of nuisance taxes”: I have used this expression already to describe the e-levy because, by taxing “savings” in electronic wallets government is among others,
a. Discriminating against savers using electronic ‘wallets’, instead of banks and pillows, to save. This offends the principle of fairness in taxation.
b. Compelling customers to pay tax on the “wallet” transfers but the same tax does not apply to those using cheques and other conventional means; and
c. Engaging in double or multiple taxation of savings that may have attracted the conventional taxes already (as noted below).
4. Likely tax E-Levy on Loans in e-Wallets: The last point may go to such ridiculous extent as paying e-levy on business loans in a bank account, for which, the bank uses its “wallet” to make transfers to customers. A rather ‘nice’ way to promote investments and reduce the cost of doing business?
5. Taxing fees and commissions: It is legitimate for owners of “savings” to (a) pay an “expenditure tax” on the commissions or fees that Banks and Telcos charge them for the “service rendered” in making the transfer; and “income tax” on the interest earned. The Banks and Telcos also pay “income tax” on the fees and commissions that form part of the profit they make.
The dilemma facing the government is that, unless the taxes mentioned are exempt by law, it
is already collecting these taxes described, discussed in detail below.
6. Our Conventional Taxes: as noted, Ghana has had a tax regime that, in the main, consists of
the following handles or instruments.