Mobile money transfers must be taxed, according to former Rector of the Ghana Institute of Management and Public Administration (GIMPA), Prof Stephen Adei has said, insisting the controversial e-levy which will make that happen, must be passed by parliament to help plug some of the revenue loopholes.
The 2022 budget proposed a 1.75 per cent levy on some electronic transactions.
The government later reduced it to 1.5 per cent following spirited opposition from the Minority in parliament.
The e-levy bill has been hanging as a result of disagreements between the two sides of parliament on its passage.
Speaking on the vexed issue, Prof Adei told Kofi Oppong Asamoah in an interview on Class91.3FM’s morning show on Thursday, 17 February 2022: “Immediately, we must find low-hanging fruits and the MoMo [tax] is one of the low-hanging ones”.
He said: “In a developing country, one of the biggest challenges in taxation is that if the cost of collection, sometimes, exceeds what you’ll get, then you must, as well, let it go”.
With the MoMo tax, however, he said “the cost of collection is almost zero”.
Secondly, he noted, “people are saying that it is consumption; no”, explaining: “But VAT is a consumption tax. The fact that you have gotten your salary doesn’t mean that when you consume your salary, you don’t pay VAT and other taxes and, therefore, the idea that it’s a consumption tax is [neither here nor there]”.
Again, Prof Adei noted, “one must note that like the l’impot of the past, if you do it across, it becomes a regressive tax; that means that everybody pays the same and you have to look at it so there’s exemption”.
“I think that there are certain transfers which should not be taxed because it is not using it to purchase things and the rate also has to be looked at and already the rate has been reduced from 1.75 per cent to 1.5 per cent”, Prof Adei observed.
Also, he said, “the government should note that the MoMo [tax], in the short run, if you tax it, it will reduce the circulation of transfers and, therefore, they wouldn’t get the GHS7 billion”.
“I can see that they would be getting about GHS5 bn. GHS5 billion is still a big amount; that’s almost $1 billion, so, they are not likely to get what has been projected but given the situation we are in now, I believe that the MoMo must be taxed and, at least, it will help bring in GHS5 billion to plug the hole while the other ones, which will bring in the bigger ones … – because I don’t think they’ll get the GHS7 billion but the other areas will bring us about multiples of that – should be pursued more aggressively but we must look for the low-hanging fruits and I believe that it should be passed and the other ones pursued”.
