OccupyGhana   Wades Into  Proposed E-Levy  Bill Controversy...Says reintroduction of E-Levy bill to Parliament must come with clear answers

The socio-political non-partisan pressure group, OccupyGhana has waded into the controversy over a proposed tax on electronic transactions called Ghana's Electronic Transaction Levy (E-Levy), saying that it believes if the E-Levy must be implemented, it must be subject to three strict conditions.

The first condition, according to the group, should be a full implementation of income tax laws and an active roadmap that will double the number of income taxpayers yearly, until all eligible tax income payers are brought within the income tax net.

The second condition, it stressed must be a statutorily enforced fiscal transparency and accountability regime that requires government, at least, to publish the revenue from the E-Levy and details of its disbursement quarterly

The final condition, the group mentioned should be a renewed commitment by Government to recover all monies declared by the Auditor-General to have been misused

THE ANAEMIC TAX SYSTEM

According to the group, the income taxes are meant to finance development, with indirect taxes shoring up the revenue from income taxes. 

Yet, in Ghana, the group stated categorically that out of an estimated eligible taxpayer population of 10 million, information available on the African Tax Administration Forum (ATAF) portal, shows that in 2020, the total number of actual tax income payers was a measly 2.3 million.

 

This state of affairs where an estimated 75% of potential income taxpayers do not pay, is unsustainable and a clear sign of failed political leadership by successive Governments.

 For instance, although in 2015 Parliament passed the modified tax provisions to draw the informal sector into the income tax net, Governments since then have inexplicably failed to apply the law

 

"Our governments refuse to do the heavy lifting required to have an effective income tax system that draws in the informal sector and repeatedly takes the easier path: indirect taxation. In Ghana today, the slew of indirect taxes includes, (i) Value Added Tax, (ii) National Health Insurance Levy, (iii) Ghana Education Trust Fund Levy, (iv) Covid-19 Health Recovery Levy, (v) Communication Service Tax, (vi) Import Duty, (vii) Excise Duty, (viii) ECOWAS Levy, (ix) EDAIF Levy, (x) Stamp Duty, (xi) ESLA Levy, (xii) Road Fund Levy, (xiii) TOR Recovery Levy, (xiv) GET Fund Levy, (xv) Price Stabilisation Levy, (xvi) Energy Fund Levy, (xvii) Special Petroleum Tax, (xviii) Energy Debt Recovery Levy, (xix) Sanitation and Pollution Levy, and (xx) Tourism Levy," the group stated.

 

The group added "And several of these are poorly designed and badly administered as evidenced in the sham benchmark value rebate that had been illegally applied to all imports, and which Government appears not to have the guts to repeal. 

"We are bleeding money and subsidising the lifestyles of importers. Thus the broader picture should be how we fix the anaemic income tax system, which might go a long way to render a lot of these burdensome indirect taxes redundant," the group said.

 

Against this background, the group asserted that the E-Levy might simply paper over the deep cracks, especially where the current, proposed E-Levy structure itself raises concerns such as what the daily zero-rated threshold should be, and how to deal with the inherent multiple taxations of the same funds, simply because they were moved around different ‘accounts.’

 

FAILURE TO RECOVER LOST STATE MONEY

While Government is focused on the revenue side, the group noted that it sees precious little effort in reining in the expenditure side and, critically, recovering monies lost to the state. 

"Government (which is demanding more taxes) and its supposedly independent Auditor-General have all but abandoned the constitutional demand that persons found culpable for misusing Government funds be surcharged and made to pay.

 

"For instance, the 2020 Auditor-General’s report shows that fiscal/financial irregularities amounted to a record 12.85 billion cedis, approximately 85% of which represents ‘trade debtors, staff debtors and outstanding loans," it noted.

Simply, the group indicated that the government and its agents gave out credit facilities and then neglected to collect the debts for criminally cringe-worthy reasons that the Auditor-General sets out, such as no debt collection policies or credit controls, indifference, improper record-keeping and non-documentation of agreements, and non-compliance with rules and regulations.

 

The group stated although the Constitution and the Supreme Court decision in OCCUPYGHANA v. ATTORNEY-GENERAL demands that all such culpable officials and ‘beneficiaries’ are surcharged, the Auditor-General has reverted to merely making farcical and impotent ‘recommendations,’ while Government and Parliament are only too happy to play along with this pantomime.

 

"It is therefore not too surprising that both the Auditor-General and Attorney-General have refused to answer our repeated requests for information on these matters. This coordinated silence is revealing because if the Auditor-General and Attorney-General had been doing their work, they would have been happy to share that information with Ghanaians, the group noted.

 

According to the group, it is difficult to reconcile this overall Government attitude with a demand for new taxes.

Group suggestions

To increase tax revenue, the group suggested that the government should put in place proactive measures to improve taxpayer education to improve voluntary tax compliance; implement the Electronic Point of Sale devices to verify sales data and VAT collections;  increase the corporate income base bypassing the Tax Exemptions Bill to reduce tax exemptions;  provide the framework to properly implement property taxation, property being a better-targeted proxy of income than momo transactions.

The group further suggested that the government must improve the efficiency and effectiveness of tax administration; repeal the benchmark values for imported goods for customs purposes; implement the modified taxation system where the informal sector plays a standard 3% rate on turnover as total tax liability; plug the loopholes and leakages of revenue, and recover funds lost and detailed in the Auditor-General’s reports.

 

Further, the group noted that it is time for proper fiscal transparency and fiscal accountability. 

"After several years of fiscal inefficiencies, no Government should use Ghana's low tax revenue-GDP ratio as justification to impose a tax like the E-Levy, without a social contract that is based on fiscal transparency and accountability. 

"Thus, if the E-Levy is approved by Parliament, that legislation must also require Government to submit itself to a fiscally transparent and accountable regime wherein every quarter of the year, Government will at the minimum, publish the revenue from the E-Levy and details of how the revenue was disbursed.

 

The group position: 

The group argued that any reintroduction of the E-Levy bill to Parliament must come with clear and satisfying answers to these concerns because the E-Levy will be meaningless unless is it linked with THE TOTAL IMPLEMENTATION OF OUR INCOME TAX LAWS, ABSOLUTE COMMITMENT TO RECOVERING OUR MISUSED MONIES, AND COMPLETE FISCAL TRANSPARENCY AND ACCOUNTABILITY.