Money Laundering, Youth Unemployment to Shoot Up If E-Levy is Passed in Current Form – Dr Ali-Nakyea

Tax expert, Dr Abdallah Ali-Nakyea, is warning of dire consequences for the country’s quest to digitalise the economy should the 1.75% Electronic Transactions Levy be passed in its current form.

He said passage of the E-Levy Bill could pose challenges for youth employment and give rise to money laundering offences.

Speaking at a Rotary Club of Accra meeting, Dr Ali Nakyea said the bill in its current form presents challenges.

“There is a risk of increased youth unemployment. Much of the growth of the Mobile Money industry has employed vulnerable youth, especially women. The Mobile Money industry creates jobs for the Mobile Money agents, service providers and users, including Fintech companies, merchants, retailers, and aggregators. Taxing Mobile Money transactions may discourage growth in transactions, and ultimately this is going to impact the business model.

“With the reduced volumes of transactions, the commission and hence revenue to the agents will reduce. As a result, mobile money agents who generate an income from mobile money transactions have been directly impacted to the extent that in Uganda and Congo, some have left the market.

“The agents exemplify those informal workers that have formalised and discouraging them from operating hinders the objectives of greater formalisation in the economy,” he said.

He also warns it could promote acts of money laundering. He explains the tax could drive users into dealing more in cash.

“The requirement to provide identification at SIM-card registration had started to drive down fraud and money laundering through the financial systems. However, by introducing the proposed tax, there is a risk that all these players could revert to using cash (because of the cost), thus increasing fraud incidences and supervision cost”, Dr Ali Nakyea explained.

He wants government to consult more on the matter.

“This is a policy that requires further deliberations and analysis, hence not ripe for implementation in the state in which it has been proposed. As indicated elsewhere earlier, if the idea, as espoused in paragraphs 307 to 314 of the 2022 Budget Statement, is to deal with the ‘shadow economy” (para. 314), looking at the total value of transactions estimated at ¢500 billion in 2020 (par. 312), digital transactions (par. 310), then there is a challenge in using taxation in this manner. In addition, there is the need to analyse the impact of the E-Levy on financial inclusion and the successful mobile money interoperability that people are relying on.”

Source: myjoyonline