E-Levy Policy: Industry players step in to support burden sharing

Two industry operators have come up with interventions to help reduce the overall impact of the proposed taxes, particularly, the Electronic Levy (ELevy) by the government in the 2022 Budget and likely to be implemented next year, following the approval of the Appropriations Bill by Parliament last Friday.

The decision to come up with the interventions followed extensive deliberations between the two industries and the government on the need to lessen the impact on consumers.

The industries are the Ghana Chamber of Telecommunications (GCT) and its mobile money operators and the Ghana Association of Bankers (GAB).

Interventions

While some companies under the GCT, namely, Mobile Telecommunications Network (MTN) and AirtelTigo, have both agreed to a downward revision of their person-to-person transfer (P2P) fees by up to 25 per cent, depending on their respective operator, another member, Vodafone, already has no charges on its mobile money operations.

GCT

The Chief Executive Officer of the GCT, Dr Ken Ashigbey, said the decision was taken to help provide some relief for its customers, as the proposed 1.75 per cent E-Levy would no doubt impact on customers.

"We support the government's plan to raise revenue for its development agenda, and after extensive deliberations on what the industry could do to support and alleviate the impact, consideration was given to the reduction in transaction charges by up to 25 per cent," he said.

Dr Ashigbey explained that the reduced charges would be operational when the E-Levy took off after the bill had been passed.

He further said the various customer service centres would provide assistance for customers during the implementation of the new levy and also do all they could to maintain the convenience of the digital platforms as the chamber supported the digital transformation effort.

GAB supporting YouStart/SME

The GAB for its part, would be focusing on supporting small and medium enterprises (SMEs) and YouStart, an intervention to help young people start and grow small businesses.

Through the initiative, dubbed, ‘YouStart’ government hopes to create one million jobs with a seed capital of GH¢1 billion and would take effect from March 2022 as contained in the 2022 Budget 2022 presented at Parliament.

It is intended to be a vehicle for supporting young entrepreneurs to gain access to capital, training, technical skills, and mentoring to enable them to launch and operate their own businesses.

A document sighted by the Daily Graphic regarding an input from the GAB for inclusion in the 2022 Budget stated: “In discussions with banks operating in the country under the GAB, they have resolved to collectively accelerate their portfolio allocation to qualifying small and medium enterprises to help uplift their contribution to economic growth and fast-track our pace to aggressive economic recovery in the post-COVID-19 era.”

To achieve this noble objective, the banks will, over the next three years, increase their lending to qualifying SMEs by between GH¢2.5 billion and GH¢5 billion, thereby increasing industry

SME portfolio from approximately GH¢7.4 billion up to approximately GH¢12.3 billion.

Over the same period, banks will review internal processes and procedures to facilitate and accommodate the planned growth in the SME portfolio.

On the Skills Development Programme, the banking industry will collectively engage in skills development programmes for a minimum of 150,000 young graduates and youth entrepreneurs over the next three years by engaging them in activities to identify skill gaps in young graduates and youth entrepreneurs and expose the youth to entrepreneurship opportunities by matching them to SME customers for the furtherance of their abilities to create and sustain jobs in Ghana, among others.

The banking industry will, therefore, be spending a total of GH¢75 million over the next three years on skills development programmes for young graduates.

Minority posture

Before the passage of the Appropriations Bill, the Minority in Parliament had indicated its opposition to the new levy, and last Saturday, the Minority Leader, Mr Haruna Iddrisu, indicated that his caucus would continue to oppose the E-Levy, despite the House passing the Appropriations Bill for 2021.

Consultations

However, a statement signed by the Minister of Finance, Mr Ken Ofori-Atta, and addressed to the Speaker of Parliament, had already announced plans by the government to continue with consultations with the Minority in Parliament over the E-Levy policy.

“Mr Speaker, on the matter of the E-Levy, having regard to its serious fiscal implications, we will continue with our consultations with the Minority Caucus in Parliament and other relevant stakeholders, with a view to achieving consensus and reverting to the House in the shortest possible time,” it indicated.
Consultations on the E-Levy were part of the modifications announced on Tuesday, November 30, 2021, prior to the approval of the budget.

Appropriations Bill

At its sitting last Friday, which run late into the night, Parliament approved the Appropriations Bill, 2021 to allow the sum of money not exceeding GH¢145.47 billion to be issued from the Consolidated Fund and other public funds to finance government operations from January 1, 2022 to December 31, 2022.

Out of the amount, GH¢80.86 will constitute payments of other government obligations, while the rest will cover discretionary payments.
Per the bill, ministries, departments and agencies (MDAs) shall be permitted to retain and use GH¢8.32 billion of internally generated funds (IGFs) during the 2022 financial year.

The bill, which was considered under a certificate of urgency during the late sitting of the House, was passed into law, in accordance with Article 106(13) of the 1992 Constitution and Order 119 of the Standing Orders of the House.

It was presented and read the first time in the House last Friday, and subsequently referred to the Finance Committee for consideration and report.

That followed the presentation of the 2022 Budget Statement and Economic Policy of Government by Mr Ofori-Atta the same day.

A Deputy Minister of Finance, Mrs Abena Osei-Asare, moved the motion for the House to approve the bill, and it was seconded by the Ranking Member on the Finance Committee, Dr Cassiel Ato Forson.

Disparity

Seconding the motion, Dr Forson, said the GHc145.5 billion that the Minister of Finance had asked for was different from the total expenditure of GH₵137 billion as contained in the 2021 budget.

He said in the same budget, there was GH₵7.9 billion for amortization and GH₵1.9 billion for arrears clearance, which, when added to the GH₵137 government expenditure, amounted to the total appropriation.

He, however, opined that the arrears clearance and amortization were not included in the expenditure allocation for the year concerned

“Mr Speaker, we have to understand that appropriation is only the summation of all the estimates that the House has; it does not mean that we have approved any revenue item. The Ministry of Finance is being given the permission to spend up to the amount that we are approving here today, and if it exceeds the appropriation, the Public Financial Management Act has sanctions that the Minister of Finance will have to face,” he said.

E-Levy not approved

He cautioned that if the government failed to raise the appropriate revenue, it would have to cut expenditure or borrow for the purposes of funding government expenditure.

“Mr Speaker, let me put on record that the approval of the appropriation does not mean we have approved the E-Levy or any other tax measure. It is only the approval of expenditure to the tune of GH₵145.5 billion,” he added.

Dr Forson also maintained that the Minority side supported the approval of the appropriation, so that the government would not come to a standstill.

“I do not believe we should have a fiscal cliff in this economy. I believe that the appropriation must go through, with the caveat that if the government fails to raise the needed revenue, the Minister of Finance has an option to cut the expenditure he deems fit,” he said.

Debate and voting on E-Levy Bill

Earlier, the Minority Leader, Mr Haruna Iddrisu, had said while the Minority was ready to vote for the Appropriations Bill, it would subject the E-Levy bill, which was taken to the House under a certificate of urgency, to thorough debate and voting.

He resisted vehemently attempts by the Majority for the House to consider the E-Levy during last Friday’s sitting.

“We cannot do E-Levy tonight, as we want to be here in our numbers to tell Ghanaians our position on the bill,” he said.