An finance lecturer at the University of Ghana Business School (UGBS), Professor Lord Mensah, has downplayed the relevance of government’s 1.75% E-levy proposal.
According to him, the policy will rather discourage citizens from using digital platforms for the daily monetary transactions.
Speaking in an interview with Emefa Apawu on Joy FM on Wednesday, the finance expert reiterated the need for government to rationalise its expenditure, in order to salvage the economy. In his view, government must take note of its available resources and spend accordingly.
“If you look at projections into the future, obviously you may have to look at the possible uncertainty that may arise as a result of a certain economic decision. We are just prompting the President that if you put the E-levy at a certain threshold, there’s a tendency that you’ll discourage people from using the platform.
And so we are giving the possible scenario that the economy may face in case we should introduce this E-levy. But then also, the attitude from the stables of government give the indication that we don’t want to manage as a country. Because a country that wants to manage, possibly, you’re looking at how you can allocate the scarce resources that you have. And with the attitude, we’re portraying as if we have the resources, and therefore we must tap into it”, Professor Mensah stated.
He also added that, “we’ve been calling for cutdown in expenditure because, we know very well that, with the little that you have, which is your revenue, you should be able to manage it through. But the attitude has been that you need excess. If you put down the appendix of the budget that was read, clearly, the carpet that was earmarked for the 2022 expenditure, all the infrastructure needs have been assigned. So I don’t see what the E-levy, which is 6.9 billion is coming to do”.
In the reading of the 2022 Budget, the Finance Minister, Ken. Ofori-Atta disclosed that, government is optimistic about generating some 6.9 billion Ghana cedis, from the imposition of a 1.75% E-levy, on all electronic transactions, starting from January 2022.
However, due to the staunch opposition by the Minority Caucus in Parliament, the levy is yet to come into fruition. According to some policy experts and a section of the populace, the E-levy is an insensitive measure, which will collapse budding businesses and impose further hardship on Ghanaians.
Meanwhile, President Nana Akufo-Addo has said his government is determined to find the means to address what he describes as revenue gaps in the budget. He said the Covid-19 hit the country hard like any other economy worldwide, thereby leaving a gap in its wake.
“Revenues during 2020/21 went down considerably because of the slowing down of the economic activities that came from the Covid. At the same time, government, in order to keep the country going, had to incur additional expenditures – the free water, the free electricity and provision of free food -were the unavoidable expenses that government had to make. So the gap in fiscal impact would have to be considered. These are the efforts that we are now making that the opposition is being resisted to try and close the gap.
It is necessary for us to do so because that is the only way some of these matters can be addressed. It is never going to be possible for us [Ghana] to continue to depend on foreign aid and grants to keep our economy going.
We ourselves must find the money for our development, and that is why it has become necessary to introduce these measures like this famous tax which has caused so much unnecessary lively disputation. Nevertheless, we would continue. I am determined to persevere to make sure that we find the means to address some of the issues”, he said.
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