The electronic transfer levy (E-Levy) accrued GH¢455.58 million for the first half of this year, missing its target by 53.64 per cent.
This is against a target of GH¢982.85 million, representing a shortfall of GH¢527.27 million of the half-year target of expected collection.
Due to the low performance, the government has revised the revenue target for the levy from the projected GH¢2.2 billion to GH¢1.1 billion in the Mid-Year Fiscal Policy Review.
From the revenue side, data sourced from the fiscal policy review showed lower-than-targeted outcomes for some of the major tax components which some economists have categorised into nuisance taxes and for that reason need to be scrapped.
Two economists, Professor Peter Quartey, who is the Director of the Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana, and a Senior Economic Analyst at the Natural Resource Governance Institute, Dr Alex Ampaabeng, in separate interviews, proposed that E-levy should be replaced with a broader electronic commerce and a digital service tax.
Prof. Quartey told the Daily Graphic after ISSER’s review of the 2023 Mid-year Budget Review that most of the taxes, including E-Levy, had outlived their purposes.
He explained that since the taxes did not yield the expected revenue, they fell into the category of nuisance taxes and must be scrapped.
“For instance, National Fiscal Stabilisation Levy underperformed in terms of its annual target by 56.7 per cent while COVID-19 Health Levy dropped by 17.8 per cent”.
“E-Levy also missed its target by more than half in the period between January and June this year.
It is obvious that the levy is not yielding the desired results,” Prof. Quartey said.
Comprehensive tax component
The Director of ISSER underlined the need for the E-Levy to be replaced with a more comprehensive tax that could capture all business transactions on the Internet.
He explained that the E-Levy was not performing because its focus was narrow and should rather be converted into what he called an “e-commerce tax” to capture more transactions in the electronic space.
“With an increased scope, coupled with a reduced rate, I think it will encourage compliance because it would be cheaper for more Ghanaians to contribute to support the government’s growth agenda,” Prof. Quartey posited.
He said that most Ghanaians were evading the levy because of the high rate, limited education and loopholes associated with its structure.
Prof. Quartey added that a cheaper and well structured e-commerce levy would rope in more people who had to pay but were not doing so.
Digital efficiencies
For his part, Dr Ampaabeng said it was time for the government’s policies to be heavy on tax reforms to create the platform to further enhance digital administrative efficiencies with regard to revenue collections.
Consequently, he stated that the government and its revenue mobilising agency must consider reviewing the tax structure with a special focus on digital taxation and e-commerce operations in order to generate enough revenue to bridge the anticipated revenue shortfall at the end of the year.
“For the multinational tech giants, I will go for a low digital service tax (DST) on gross turnover for a start.
For example, there should be between three and six per cent tax on their gross receipts,” Dr Ampaabeng said.
“With this, we can capture the revenue from Facebook, Youtube, TikTok, among other platforms,” he explained.
He said the recently introduced Value Added Tax (VAT) on Meta transactions was a good step but it should go beyond that and rather tax the gains of the company.
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