Vice President Dr. Mahamudu Bawumia, has finally broken his deafening silence on the controversial electronic transfer levy (e-levy), stating categorically that he will abolish the widely criticized tax as well as the emissions tax and other taxes if elected President of Ghana this year.
Delivering his policy statement and priorities of his government to Ghanaians in Accra on Wednesday February 7, 2024, Dr. Bawumia said abolishing the e-levy tax, or tax on mobile money transactions, will boost his government’s bid for a cashless society.
While lamenting the huge loss of government revenue, which he estimated to be a whopping $24b or 13% of GDP, because of several people outside the tax basket, Dr. Bawumia said his new revenue generation reforms, which will also abolish some taxes including the emissions tax, tax on betting and others, will help reform the GRA and help boost both businesses and government revenue.
“The current tax regime has been with us since independence and it has failed us,” Dr. Bawumia said.
“Many individuals and businesses find our tax system cumbersome and confusing and many feel harassed by the GRA.”
“Many of the wealthy do not pay taxes, including property taxes. Too much discretion results in corruption. We want a regime that is easy to understand, easy to comply with and easy to enforce and that is not subject to so much discretion.’
“To increase government tax revenue, we have to reform and refocus the Ghana Revenue Authority (GRA) towards broadening the tax base,” he added.
Dr. Bawumia noted that the current tax system puts undue pressure on GRA staff to collect revenues and makes them focus on existing tax payers.
“Sometimes they even have to go to sit in peoples shops to monitor sales, a process known as invigilation. In fact, many businesses feel harassed by this process and the constant audits of their operations. This has to stop.”
“We must strike the right balance between collecting revenue and allowing businesses to thrive. Our job is to protect the productive forces.’
“Estimates suggests revenues amounting to 13% of GDP, or $24 billion in 2023 are not collected because people are outside the tax net. Even collecting half of or a quarter of this annually will be a game changer for public finances.”
To achieve this, Dr. Bawumia stated, his government will inculcate and enforce a culture of people filing their tax returns.
“Incentives must be provided to encourage people to file their tax returns even if they will pay zero taxes. We need a fresh start,” he said.
Dr. Bawumia also indicated that he will abolish the proposed 15% VAT on electricity, if it is still on our books by January 2025.