Seth Terkper, a former minister of finance in the John Mahama administration, has said the government should not pin its hopes on the Electronic Transfer Levy.
Terkper said he does not believe that the E-Levy is the solution to Ghana’s economic problems.
Speaking on The Forum with Wilberforce Asare on Saturday (2 June 2022), Terkper said, “For me, the E-Levy is poorly designed. Even the Securities and Exchange Commission came with a letter assuring the investing public that they were going to have discussions with the Ministry of Finance on the structure.”
He added that the government should not have made E-Levy an alternative to an International Monetary Fund programme.
“Because it’s taxing loans, it’s taxing savings, something we’d never done. So its design is poor. And if we make concessions to business and industry and the rest, then we’re not going to realise it.
“As we speak, we have about 11 levies, from the pollution levy … It’s in the Budget. So the E-Levy may not necessarily solve the problem.”
Crisis measures
The former finance minister argued that the E-Levy is not exceptional.
“Let me point out quickly that the E-Levy is not extraordinary,” he told Asare. “Since the Rawlings era, we have had three instruments. They are referred to as temporary taxes, temporary import duties, and the National Stabilisation Levy.
“They always have sunset clauses. During a crisis, as part of IMF programmes, they are brought on board. By the end of the IMF programme, they will be phased out. It was repeated in the Kufuor era. It was repeated in the Mills era.”
He added, “We had these two instruments and we are going to phase them out. So we have had this tradition.”
The E-Levy is here to stay
However, Professor Lord Mensah, an associate professor at the University of Ghana Business School, has said the E-Levy will not be phased out any time soon.
“One of the conditions if we go to the IMF will be that the government will have to find a way to enhance its revenue generation.
“If the government has an E-Levy in place, I don’t think, in rational economic decision-making, the government will drop the E-Levy. So, effectively, the E-Levy has come to stay.”
He added: “But my argument is … having paraded the E-Levy as an alternative to the IMF – [that] is where the problem is.”
