Former Finance Minister, Seth Terkper has dismissed reports that he has endorsed the proposed Electronic Transaction Levy in the 2022 Budget. According to him, implementing the e-levy directly means taxing savings and investments.
“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. 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?”, he mentioned in a statement.
Mr. Terkper pointed out that the E-levy is the “worst of nuisance taxes”, describing it as “discriminating against savers using electronic ‘wallets instead of banks and pillows, to save”. This he said offends the principle of fairness in taxation.
“I have used this expression already to describe the e-levy because, by taxing “savings” in electronic wallets government is among others, discriminating against savers using electronic ‘wallets’, instead of banks and pillows, to save. This offends the principle of fairness in taxation”.
He also noted that the E-Levy is a practice of engaging in double or multiple taxation of savings that may have attracted the conventional taxes already.
Furthermore, the former Finance Minister said it will be ridiculous for paying e-levy on business loans in a bank account, for which, the bank uses its “wallet” to make transfers to customers, questioning, “is it a ‘nice’ way to promote investments and reduce the cost of doing business?”.
“The dilemma facing the government is that, unless the taxes mentioned are exempt by law, it is already collecting these taxes described”, Mr. Terkper said.
In conclusion, he said the telecommunication firms paid Value Added Tax on taxable goods and services, but the government abrogated the VAT on non-core financial services in 2017.
“Why impose another tax or levy on other finance sector savings, not just expenditures?” he questioned.
“Is it time to overcome the “kumipreko” blues, call the e-Levy a VAT increase and stop distorting our well established tax regime with numerous levies in addition to “capping”?, he added.