The electronic transfer levy (E-Levy) for the first half of the year has fallen significantly short of its target, prompting calls for its replacement by economists. The E-Levy, which aimed to collect GH¢982.85 million, only accrued GH¢455.58 million during this period, marking a substantial deficit of GH¢527.27 million, a 53.64% shortfall.
As a result of this underperformance, the government has adjusted the revenue goal for the E-Levy from GH¢2.2 billion to GH¢1.1 billion as part of the Mid-Year Fiscal Policy Review.
Economists are now advocating for a change in approach. Professor Peter Quartey, Director of the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, and Dr. Alex Ampaabeng, a Senior Economic Analyst at the Natural Resource Governance Institute, both proposed alternatives in separate interviews.
Prof. Quartey labeled the E-Levy, along with other taxes, as having outlived their intended purposes due to poor revenue generation. He highlighted that the National Fiscal Stabilisation Levy had underperformed by 56.7%, while the COVID-19 Health Levy had dropped by 17.8%. Prof. Quartey suggested replacing the E-Levy with a broader electronic commerce and digital service tax to capture a wider range of transactions.
He emphasized the need for a more comprehensive tax structure that could encompass all online business transactions, ultimately encouraging compliance through a reduced rate.
Dr. Ampaabeng also supported the idea of reforming the tax structure, particularly in the digital realm. He recommended the introduction of a low digital service tax (DST) based on gross turnover, ranging from three to six percent. This approach would target multinational tech giants, such as Facebook, YouTube, and TikTok, to generate revenue.
While the government has taken steps in the right direction with the introduction of Value Added Tax (VAT) on Meta transactions, economists believe that further measures are required to ensure efficient revenue collection and bridge the anticipated revenue shortfall.
In summary, the E-Levy's substantial underperformance has prompted economists to propose replacing it with a more comprehensive electronic commerce and digital service tax, targeting a wider range of transactions and digital platforms. These recommendations come as part of a broader call for tax reforms to enhance revenue collection efficiency.
Source: Graphic Online