In an interview with the media giant BBC, Ghana President Akufo Nana Addo stated that Ghana has a tax-to-GDP ratio of 13%, which is far less than the average in West Africa, which is 18%. The United States has 25%, and most European countries have 35 to 45%. The statistics show that fewer people in Ghana pay taxes. The Akufo Addo-led government proposed the electronic levy bill which is now a law in the country.
The electronic levy has generated more heat in the country from its introduction of the bill to its passing of it into law. Parliamentarians, stakeholders, and citizens strongly rejected the bill and demonstrated to vent their frustration, but the electronic levy was still passed. The central bank of Ghana revealed that the digital economy lost over $ 1 billion in two months starting last November as customers switched to using cash instead of the digital platforms ahead of the bill coming into force.
Why did the government pass the electronic levy bill if the Bank of Ghana made this revelation ahead of the passing of the electronic levy law? Deputy Finance Minister John Kumah told the local media outlet that the country will face about a 24% attrition rate in the first three months to six months of the introduction but the government has things in place to bring up the love for digital transactions in the people.
A leading member of the New Patriotic Party, Gabby Otchere-Darko has indicated that the Electronic Levy has generated less than GHS60 million out of the estimated GHS600million after the implementation of the levy.
In response to the statement made by the opposition politician the MP for Ningo Prampram, Hon Sam George, has revealed that they sounded the word of caution to the party in power, but they were called doomsayers. He said that the digital economy that the country has thrived to create since the administration of Late Ft Lieut is destroyed.
In a big shop at the heart of the sprawling Makola market in Ghana’s capital, Accra, Owura arranges a row of his sneakers in Kantamanto. He said that most of his businesses use mobile money, and it allows him to store cash and send and receive payments from his clients. According to him, this system is way faster than the traditional banking system, and it also helps avoid customers using fake notes to purchase products. Owura said that it is good the government is trying to raise money for developmental projects, but the bill has increased the cost of business and the prices of their goods and services.
Over the last three months, prices of goods and services in the country have doubled. The cost of transportation has increased nearly four times. An unemployed graduate in the Ningo-Prampram District stated that at the beginning of the year, he was able to move to and flow from his village to Accra to go about his job hunting because it was only GHS12 but he is unable to do that because it is now GHS40.
Things are already so costly, and on top of that, we, the people who are burdened with so much economic hardship are expected to raise over 600 million Ghana cedis. It is a worrying situation in the country. I have stated in several articles that electronic levy is a good policy, but the timing is very wrong. Low-income workers and small-scale businesses are the most affected because they heavily rely on mobile money transactions. Banks are few in rural areas, and many citizens see mobile money as a low-cost, safe, and efficient alternative to bank accounts for holding large sums of money. Now the beauty of mobile money has been destroyed by electronic levies, and Ghana’s digital economy has depreciated drastically.