By Francis Ntow
Accra, Jan 12, GNA – The Mobile Money Agents Association of Ghana (MMAAG) is calling for the Government to revise the daily threshold of Electronic Transfer Levy (E-Levy) from GHS100 to GHS500.
It also called for a further reduction of the rate charged on daily transactions exceeding GHS100 from one per cent to 0.5 per cent, while addressing the loopholes in the tax handle to stimulate tax compliance and revenue target actualisation.
The call comes as the Government implements the new one per cent rate, effective Wednesday, January 11, 2023, a 0.5 downward percentage revision from the previous 1.5 per cent rate.
A study by the Centre for Economics, Finance, and Inequality Studies (CEFIS), has shown that a reduction of the rate to 0.5 per cent could increase revenue from the levy to GHS3.2 billion in 2023, which is higher than the Government’s projected GHS2.6 billion for the same period.
The figure is expected to increase to GHS3.6 billion in 2024 and reach GHS4bn by 2025, which are equally higher than the Government’s expected revenue of GHS3bn and GHS3.4bn for 2024 and 2025, respectively.
The Centre noted that a 0.5 tax rate on E-ley would increase tax compliance hence, more transactions through MoMo – the major source of electronic transactions particularly among the poor and the number one driver of financial inclusion in Ghana.
When the Ghana News Agency, spoke to Mr Evans Otumfuo, the General Secretary of MMAAG, he described the reduction of the rate from the 1.5 per cent to one per cent, as welcoming.
Mr Otumfuo, however, said there was the need for a further reduction because the 1.5 per cent rate had put pressure on the MoMo industry and negatively affected their operations and that of other businesses.
He said: “The rate should come down and when that’s done, people who may think of alternatives will see the rate as insignificant and they’ll gladly accept to pay, so we’re calling for a rate for the levy to be between 0.1 to 0.5 per cent.”
He added, “If you walk to the bank, you’re at liberty to transact GHS20,000 daily without any E-levy applied to you, but if you come the MoMo platform, it’s only GHS100. So, the threshold for MoMo should be extended to GHS500.”
“Consumers are sensitive to prices such that so when prices are lower, consumption will be higher, so, with the data that will come from the volumes of transactions, we expect that going into the mid-year budget review or the 2024 budget preparation, there should be a further reduction in the rate.” Mr Otumfuo, said.
The Government’s hope of raking in about GHS6.9 billion in taxes from the E-levy failed in 2022, leading to several revisions in the revenue projections with the recent one being GHS594 million for quarter four of 2022 per data in the 2023 budget.
Data from the Ghana Revenue Authority (GRA) also showed that revenue from the E-levy between May and September 2022, was GHS328m – which was some 10 to 15 per cent month-on-month improvement in the collection of the tax.
Mr Otumfuo was hopeful that the one per cent rate would make traders and individuals who did larger volumes of transactions made some business sense to use MoMo as the major platform for their payment of goods and services to shore up revenue.
To boost the interest of Ghanaians to use MoMo the more, he called for capping on huge sums of daily transactions and said: “The Government can cap transactions and say any amount above GHS5,000, you’re to pay a GHS50 or GHS100.”
“With this capping, it will provide a conducive environment for the MoMo to strive further,” the General Secretary of Mobile Money Agents Association of Ghana, told GNA.
Some MoMo vendors, traders and individual users of MoMo, who spoke to GNA said the reduction would have positive effects on their daily lives.
The Ghana Chamber of Telecommunications has assured that the systems of telco operators had been reconfigured to make the new rate of one per cent after a daily transaction of GHS100 threshold was applied effectively.
GNA