E-Levy Better Than Going To IMF For Peanuts – Stephen Adei

Professor Stephen Adei, a former Board Chair of the Ghana Revenue Authority (GRA), is arguing for the adoption of the contentious Electronic Transfer Levy (E-Levy).

He believes that the E-levy is a more viable option for addressing income gaps than requesting a bailout from the International Monetary Fund (IMF).

Prof. Adei, the former Rector of the Ghana Institute of Management and Public Administration (GIMPA), believes that collecting more money domestically, such as through the new E-levy tax legislation, is the remedy for reviving the economy.

“I don’t think we should go to the IMF right now.” This is the time to put an end to the NPP and NDC nonsense and get [moving]. I don’t believe we need to go to the IMF because two things will happen: policy descriptions will be changed, and the quantity of money we will receive will be less than half of what E-levy will provide. As a result, policy direction changes and measures are required, and we can do this on a domestic level.”

Prof. Adei believes that the estimated revenue from the E-levy is sufficient to close several revenue gaps and should not be allowed to elude the government.

“I believe they would receive around GH5 billion.” GH5 billion is still a significant sum; it’s about $1 billion. Even if they are unlikely to obtain what was expected given the current scenario, I believe the MoMo should be taxed because it will at least assist bring in GH5 billion to cover the hole,” the academic stated.

He backed up his claim by stating that the amount of money needed to collect the E-levy is minimal in comparison to other tax regimes that are difficult to implement.

“We need to locate low-hanging fruits right away, and the MoMo [tax] is one of them.” One of the most difficult aspects of taxing in a developing country is that if the expense of collection exceeds the amount collected, you must let it go. The MoMo tax, on the other hand, has a near-zero collection cost.”

He stated this in an interview with Class FM in Accra last week.

The main debate right now is whether the government should push through the controversial 1.75 percent electronic transaction charge, which is expected to bring in $1 billion yearly, or go on an IMF program.

The government declared the tax on basic transactions related to digital payments and electronic platform transactions in the 2022 Budget.

The rate was 1.75 percent in the budget, but it is projected to be cut to 1.5 percent. Despite the projected reduction, the bill is nonetheless facing strong resistance.

In the face of widespread popular opposition to the E-levy, some commentators have suggested that seeking an IMF bailout would be a preferable option, but the administration has stated that it will not do so.

Others have dismissed proposals for Ghana to enter an IMF program, claiming that the only alternatives available to the country are fiscal discipline, a reduction in wasteful spending, and the plugging of tax leakages.