Some tax consultants have praised the government’s policies on tax as introduced in the 2022 budget to help improve its revenue mobilisation efforts.
They said with the exception of the removal of toll charges and the imposition of an electronic levy (E-Levy) on transactions, all the policies on tax introduced in the budget were crucial to enhance revenue mobilisation and assist in addressing the debt sustainability issues.
As a result, the consultants called for increased consultation among stakeholders, especially on the E-Levy scheduled to start in February 2022.
Presenting the 2022 budget to Parliament on November 17, the Minister of Finance, Mr Ken Ofori-Atta, announced about 12 measures to enhance revenue mobilisation, widen the tax bracket, and reduce reliance on borrowing.
Levy on electronic transactions
A Senior Lecturer at the University of Ghana (UG) Law School, Dr Abdallah Ali-Nakyea, said the 1.75 per cent levy imposed on electronic transactions was a policy that required further deliberations and analysis, hence not ripe for implementation in the state in which it has been proposed.
“If the idea, as espoused in the budget, is to deal with what has been described as ‘shadow economy’, looking at the total value of transactions estimated at GH¢500 billion in 2020 through digital transactions, then there is a challenge in using taxation in this manner.
“There is the need to analyse the impact of the E-Levy on financial inclusion and the successful mobile money interoperability that people are relying on. (Tanzania and Kenya are countries where such studies have been done and can offer Ghana some guidance),” he said.
Dr Ali-Nakyea observed that if the e-levy was meant to capture the informal sector, the modified taxation has been identified as capable of dealing with the sector’s contribution to revenue mobilisation.
“If it is about raising revenue for creating employment and handling the cyber security space as some of the purposes of the use of the revenue, one will ask what has happened to the communication service tax also for the same purposes?” he asked.
He said the government should rather consider reviewing the communication service tax, since the mobile money platform hinges on that as well.
According to him, even after the challenges have been addressed and a consensus reached, a second look at the rate of 1.75 per cent is necessary.
“For a start, a rate of between 0.5 per cent and one per cent should be considered.
“This can be reviewed as the years go by after the impact analysis starts trickling in, so the situation of introducing tax handles and withdrawing or abolishing them does not arise,” he stated.
Enhance revenue mobilisation
The lecturer, who is also the Director in-charge of Ali-Nakyea and Associates, indicated that in an effort to enhance revenue mobilisation, the removal of toll charges was not a welcome policy.
“If it is about congestion and pollution, the solution lies in the relocation of the toll booths outside city centres and not the abolition.”
“With the digitisation drive, the tolls can be automated so vehicles drive through without stopping to pay at the toll booth. This is evident with the current lanes that use the E-tickets currently,” he said.
Introduce road tax
Corroborating the views of the senior lecturer, the Fiscal Policy Specialist at Oxfam in Ghana, Dr Alex Ampaabeng, in a separate interview with the paper, called on the government to review both the removal of toll charges and e-transaction levy.
On the toll charges for instance, he said the government should rather consider replacing it with what he described as road tax to be collected from vehicle owners at the beginning of every year.
“We need alternative ways of generating more revenue for the maintenance of our roads and so, I think the government should consider bringing in a road tax.”
“This tax should be collected when a vehicle owner is renewing his or her road worthy and so, it should be a one-off payment every year,” he said.
He added that the proposed road tax regime will be a fair system for all vehicle owners to pay for the repair of the roads than the road toll where only those who ply the route of the toll booths were captured.