Long-running reports of disputes within the government’s Economic Management Team regarding the execution of several tax laws, most notably the Electronic Transactions Levy (E-Levy), took concrete shape on Wednesday when Vice President Dr. Mahamadu Bawumia pledged to eliminate the levies should he be elected president.
He declared that the E-Levy and several other contentious government levies, like the 15% VAT on household electricity use, would be eliminated while he was in office.
The leader of the New Patriotic Party stated in a national speech that he wants to see Ghana go cashless as soon as possible to promote economic development and combat corruption. As a result, he believes that rather than discouraging people from using cashless payment methods, we should be encouraging them to do so.
“To accomplish this, there will be no taxes on digital payments under my administration. The e-levy will therefore be abolished,” Dr Bawumia announced.
In a similar vein, he declared that the most recent additions the emissions tax and the value-added tax on electricity consumption will be eliminated through new tax policies he is putting forth, which would reform the Ghana Revenue Authority and enhance the tax system while also expanding the tax base and raising tax collections.
According to Dr. Bawumia, estimates indicate that because some individuals are not subject to taxes, revenues of 13% of GDP (or $24 billion in 2023) are not collected. Even if just half or a quarter of this amount is collected yearly, it would significantly impact public finances.
We have achieved a budget deficit of 4.2% of GDP in 2023 with the policy measures put in place thus far, above the IMF’s target of 5% of GDP. With the new policies I’m putting in place for 2025, we’ll have the financial room to do away with some taxes, like the electricity VAT, the emissions tax, and the betting tax, without going over our deficit target.
For the time being, he claims the taxes will be removed from the books if given the opportunity (as the bus driver and not the bus conductor).
In anticipation of a statewide demonstration on Tuesday, February 13, organized labor has already laced its boots. The rally is meant to protest and demand the elimination of the 15% VAT on electricity use.
Labor claims that the levy will worsen the already precarious situation of workers due to the challenging economic climate.
However, the government decided late on Wednesday night to postpone the tax’s implementation to foster agreement on the best course of action.
