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Afrobarometer confirms majority of Ghanaians were against introduction of E-Levy

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When the Akufo-Addo administration said it needed to raise more domestic revenue by widening the tax net, one of the best ways it thought of, was to introduce a tax known as the Electronic Transaction Levy (E-Levy).

But most Ghanaians disapproved of it. However, the government, deep in debt and with very poor credit ratings, couldn’t raise money on the international financial markets, and heavily in debt, with inflation galloping non-stop and the cedi depreciating against the US dollar, went ahead in May to introduce what most competent economists and tax analysts have described as a punitive tax.

The government initially set a revenue target of GH¢6 billion a year but had to reduce it to GH¢4.5 billion before implementation of the law. However, one month after the introduction of the tax, it became obvious that the annual target would be missed. The revenue the tax generated is reported to be approximately GH¢60 million – a clear indicator of what citizens thought of the tax and how they reacted.

The new Afrobarometer study which results were published yesterday July 13, 2022 only confirmed what Ghanaians thought of the new tax – they disapproved of it.

Afrobarometer is a pan-African, non-partisan survey research network that provides reliable data on African experiences and evaluations of democracy, governance, and quality of life.

According to the Afrobarometer in its ninth round, three-fourths of Ghanaians disapprove of the E-Levy.

The report also found that many citizens do not trust that the government will use the revenues generated to fund development programmes. Additionally, the report found that citizens are almost evenly split as to whether they will continue to use electronic financial transactions.

The study shows that a majority of Ghanaians believe there are several important goals that a tax revenue system must achieve, including ensuring that people understand the taxes they owe, reducing the tax burden, using tax revenues more effectively, and ensuring that citizens and businesses pay taxes

The key findings of the Afrobarometer are the following: Three-fourths of Ghanaians disapprove of the E-Levy, including 67 per cent who “strongly disapprove” of it. Only two in 10, that is 19 per cent endorse the new tax.

A similar proportion (76 per cent) think the E-Levy is a bad idea because it will increase the tax burden on the poor and ordinary citizens. This includes 63 per cent who “strongly agree” with this view.

It also found that three-quarters are also “not very confident” (24 per cent of respondents) or “not at all confident” (51 per cent) that the government will fulfil its pledge to use the revenues generated by the E-Levy to fund development programmes.

Faced with the E-levy, Ghanaians are about evenly split as to whether they will continue to use electronic financial transactions (47 per cent) or avoid using them (49 per cent), the report said.

It notes further that majority of Ghanaians agree that there are several important goals that a tax revenue system must achieve, including ensuring that people understand the taxes they owe (82 per cent), reducing the tax burden (81 per cent), using tax revenues more effectively (83 per cent), and ensuring that citizens and businesses pay taxes (79 per cent).

Faced with dire economic straits, the government has turned to the International Monetary Fund (IMF) for help.

By Emmanuel K. Dogbevi

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