Dr Abdallah Ali-Nakyea, a tax expert, says the potential risks and dangers associated with the Electronic Levy implementation may far outweigh the revenue envisaged by policy makers.
He, therefore, called for extreme caution and wider consultation on the matter, saying any unmeasured implementation would bruise or even undermine the mobile money industry, the veritable platform for enhancing financial inclusion for the poor and the unbanked.
Dr Ali-Nakyea was speaking at a forum on the e-levy: the what, the why and the how-to, organized by a Joint Meeting of 10 Ghana's Rotary Clubs in Accra.
He explained that there was the need to analyse the impact of the e-levy on financial inclusion and the successful mobile money interoperability that people were relying on, adding that Tanzania and Kenya, which had conducted such studies could offer Ghana some guidance.
He identified some of the challenges of implementation as identification of the taxpayer and monitoring the threshold of transfers made, the collection mechanism of the tax and record keeping for tax audit purposes, for example and the scope of the exemptions.
For a start, he urged the government to consider a rate of between 0.5 per cent and 1 per cent, because most of the countries with a rate above one per cent had the rate applied on the service fees, whereas those with a rate between 0.2 per cent and 0.5 per cent had it being applied on the value of the transaction.
“This can be reviewed as the years go by after the impact analysis starts trickling in, so the situation of introducing tax handles and withdrawing or abolishing them does not arise."
The Senior Lecturer at the School of Law, University of Ghana, said there was the need to plug any loophole and leakage of revenue to enhance revenue mobilization.
He said recovery of funds, as detailed out in the Auditor General’s reports could also shore up revenue mobilization as well as plug some loopholes since with recovery through surcharges, such leakages might not be repeated.
“There is the need to ensure efficiency and effectiveness in the administration and collection of the existing taxes,” he added.
He said the GRA had announced a feat of exceeding its 2021 target of GHS57.055 billion by GHS265.39 million by collecting GHS57.32 billion. It chalked this success as a result of plugging the loopholes for tax avoidance by some multinationals in the extractive sector.
He said the Authority also deployed digital and specialised monitoring platforms for tax collection purposes; enhanced collections at the ports through the ICUMS, and increased attention to sectors of the economy that showed growth.
The Director of Ali-Nakyea and Associates said if the levy was about the informal sector, the modified taxation system had been identified as capable of dealing with the sector’s contribution to revenue mobilization.
Again, the Tax Expert said if it was about raising revenue for creating employment and handling the cyber security space as some of the purposes of the use of the revenue, one would ask what had happened to the communication service tax also for the same purposes.
“Is it not possible to then consider reviewing the communication service tax, since the mobile money platform hinges on that as well? "
Dr Ali-Nakyea said this was a policy that required further deliberations and analysis, hence not ripe for implementation in the state in which it has been proposed.
He said as indicated elsewhere earlier, if the idea, as espoused in paragraphs 307 to 314 of the 2022 Budget Statement, was to deal with the ‘shadow economy”, looking at the total value of transactions estimated at GHS500 billion in 2020, digital transactions, then there was a challenge in using taxation in that manner.
On the impact of the levy on the economy, the Tax Expert said there were the risks of promoting acts of money laundering and the tax could drive users off the Mobile Money platform and resort to insecure cash dealings increasing the risks associated with it.
He said the requirement to provide identification at SIM-card registration had started to drive down fraud and money laundering through the financial systems and by introducing the proposed tax, there was a risk that all these players could revert to using cash (because of the cost), thus increasing fraud incidences and supervision cost.