*Stage by Stage Analysis(Final) 

Story: Richmond KEELSON & Atta Kwaku BOADI

E-levy in other African countries 

As we conclude our series on the E-Levy, we must reiterate the point that ours is to inform and educate.  Ours is not to judge nor is it to engage in propaganda.  

In the course of the E-Levy debate, there was the search for precedents set in other jurisdictions which outcome would impact on Ghana’s attempt at adopting the electronic levy. Both sides of the divide went in search of any such adoption or rejection by these countries to boost their stance on the controversial subject. 

It then came to the fore that in Sub-Saharan Africa, some governments attempted to impose e-levy rates on digital transactions. The outcome of the attempts was mixed. While some succeeded, other failed woefully. For instance, in Uganda, tax on electronic transactions was fiercely resisted by the citizenry; thus forcing the Museveni government to reduce the E-Levy tax to nominal 0.5 percent. That even applied to withdrawals only. 

Aside of the popular uprising against the new tax system, perhaps the decision by the Ugandan government to reduce the E-Levy tax rate may have been influenced by UNCDF study that ‘’ assessed the effects of the tax on consumer behavior and digital financial inclusion on selected Ugandan users.”

The UNCDF concluded in its research that the tax regime will impact negatively on vulnerable groups. 

In the case of Nigeria, the World Bank estimated that the ‘’country is likely to make N 462bn (US$ 1.13bn) from the electronic money transfer levy as a source of stable revenue in 2021.’’ It however noted that the Nigerian ‘’EMT Levy applies a fixed NGN 50 (US$ 0.12) for all transactions over NGN 10,000 (US$ 24).’’

In Ghana, government’s decision to adopt E-Levy was to leverage on the success of the flourishing mobile money economy over the past years. Mobile money has easily increased access to digital financial services in Ghana and thus bridged the financial inclusion gap. It’s estimated that as at November 2021, Ghana had 47.3 million registered users with 18.4million active users and ‘’over GHs 80 billion (US$13 billion) value of mobile money transactions performed. 

It is clear why government would take advantage of a country that has become one of the fastest-growing mobile money markets in Africa, with registered accounts increasing six-fold between 2012 and 2017?

Some Ghanaian financial market experts argued that ‘’the e-levy is expected to increase tax revenue by GHs 6.9 billion (US$1.1 billion) for the government to help reduce the budget deficit’’. The other argument was that after struggling with the implementation of a comprehensive tax regime due to the non-regulated informal economy, the E-Levy was the best tax system to cover for the loses or the tax void within the informal sector. 

It’s the contention of many industry players that ‘’mobile money has provided a platform for bringing the informal sector to the formal financial services arena and that provides a channel to implement a tax regime that reaches almost all its adult citizens.’’ With almost every adult mobile money user captured in the E-Levy tax, government believes ‘’the potential revenue generated will be used to finance ‘YouStart Initiative, road construction, develop the digital space of Ghana and particularly the development of basic education in the country amongst several others.’’  
According to government, ‘’the YouStart initiative would be a vehicle to support young entrepreneurs to access capital, gain technical skills, receive training and mentoring to enable them start their own businesses which will go a long way to solve the nation’s youth employment challenge.’’

On the issue of the potential hardship that the E-Levy will unleash on many vulnerable groups, this was government’s response: ‘’The government has guaranteed a waiver for transaction below GHS100 (16$SD) a day which will be exempted from the tax to ensure that vulnerable groups can still access digital transactions without cost.’’ 

‘’Exemptions also exist for merchant and salary payments if the merchant/business is registered with Ghana Revenue Authority (GRA), government argued. That notwithstanding, there are concerns from other industry stakeholders on the potential impact of the e-levy on the country’s current digitization agenda. 

Various stakeholders have held the view that the ‘’E-levy will reverse all the gains made with Digital Financial Services, leading clients to revert to cash.’’ Although government agreed to the stated view in its analysis of the impact of the E-Levy, it remains nonetheless the contention of many government officials that only 24 percent of users will drop off within the first couple of months but users will eventually go back to using digital services because the benefits far outweigh the negatives. 

There is some useful comparison of the government’s position to a UNCDF’s survey conducted on the impact of mobile money tax in Uganda that is worth noting. According to the research, ‘’38 percent of respondents used mobile money less after the introduction of the tax in the Eastern African country. Low-income users were unduly affected by the withdrawal tax, compared with higher income groups.

About 57.4 percent of high-income respondents started using agent banking as a direct result of the tax compared to 11.1 percent of low-income respondents who could not better access alternatives where similar tax is not applied. Overall, there was a drastic decrease in transaction value after the tax was introduced of over 50 percent where higher income users more likely to engage higher-value transactions migrated away from mobile money.’’

Other views held by financial and tax experts on E-Levy.

According to some tax experts ‘’digital finance has played a huge role in financial inclusion by offering innovative financial products and services to underserved people. Despite the strides made by mobile money in Ghana, financial literacy levels are low and customers seem sensitive to the slightest price increments leading to more exclusion. The more expensive transactions become, the easier it could be to revert to cash.’’

While an e-levy can be justified by the need for stable source of revenues, they contended ‘’there is a potential risk of going back with the digital agenda and discouraging users from using formal platforms, with a final negative outcome for the revenue collection. Initial assessment suggests that there  is  a clear trade-off between two of the government’s key agenda, namely effective domestic revenue mobilization and financial inclusion.’’ 

It’s also the fear of these analysts that ‘’While the waiver of exemption below GHs 100 is clearly a sign of the willingness to safeguard excluded groups, the risk of dropout of average users remains undetermined.’’

Based on its market development approach, the UNCDF encourages government, stakeholders and other players to ‘’explore tax policies that strike a balance between government priorities and the reactions the market might have. Best practices suggest that vulnerable groups should be put at the centre of such policy making to leave no one behind in the digital era; broad consultations and public-private dialogue are encouraged to inform the action; weighted waivers could be considered to provide solutions that take into account user profiles and transaction types.’’

Minority go to Supreme Court to stop President from assenting E-Levy.

As stated earlier in our previous write-ups on E-Levy, Minority Members of Parliament staged a walk-out before the Electronic Transfer Levy (E-Levy) Bill was passed on Tuesday, March 29, 2022 afternoon. The Minority had complained about the way it was virtually dribbled by the majority group in Parliament. According to the NDC minority group it was taken by surprise by the consideration of the levy because the tax bill was not listed in Parliament’s business statement for the week.

The Bill which was considered under a certificate of urgency was adopted at a reduced rate of 1.5% from the proposed 1.75%. The Minority MPs therefore staged a walk out of Parliament before the second reading of the Bill after debating it. As a result, the proposed amendments in the name of some Minority MPs were removed because none of them was present to move the amendments. Speaker Alban Bagbin although stated his surprise by the minority action, had the easiest of jobs in accepting the approval of the E-Levy bill, indicating that the walk-out by minority ‘’would not affect the course of proceeding.’’

The NDC Minority then filed a suit at the Supreme Court to prevent President Akufo-Addo from assenting to the E-levy bill. The Minority Leader Haruna Iddrisu led the NDC charge for Stay of Execution suit. He was supported by Mahama Ayariga and Samuel Okudzeto Ablakwa. Interestingly, the same Minority who opposed the Supreme Court’s ruling on the Deputy Speakers’ voting rights were using same Supreme Court judgement as the basis in making a case on the passage of the controversial Electronic Levy Transactions.

In the estimation of the opposition MPs, the approval of the E-levy by a one-sided House was illegal and unconstitutional because the Majority did not have the required number present in the House to approve the policy proposal. In a press conference after their walk out in Parliament, Minority Leader, Haruna Iddrisu disclosed: There is no E-levy despite the approval by a one-sided House on Tuesday, March 29.’’, adding that the approval was a charade. 
“This is a charade. The majority of less than 137 conducting businesses only proceeded on illegal and unconstitutional business. Parliament did not have the numbers to take any decision that should be binding on Parliament and Ghanaians”, Haruna Iddrisu declared. On his part, the MP for North Tongu, Okudjeto Ablakwa said, “there can be no contention about Adwoa Safo’s absence from today’s proceedings. Trust your NDC representatives, we have a conscience, and we know that the real power belongs to you”.  “Going by the Supreme Court’s decision, the E-Levy has not been passed. What transpired today is a ridiculous nullity” he said.

Akufo Addo assents to E-Levy Bill 

Despite the minority decision to challenge the E-Levy passage into law, President Akufo Addo assented or signed the E-levy Bill into law. Speaking to a section of the media, Information Minister, Kojo Oppong Nkrumah, confirmed the President assented to the Bill on Thursday, March 31, 2022, meaning E-Levy ‘’had become a binding law which would be operationalised as a revenue measure across the country.’’

Finance Minister, Ken Ofori-Atta also hinted that the implementation of the E-Levy would commence on May 1st, 2022. He disclosed that the Ghana Revenue Authority (GRA) would have all the systems in place for the operationalization of the levy.  ‘’We had a key meeting with the Controller General and the GRA and they have indicated to us that right at the beginning of May, they should be able to get the systems altogether,” he said.

Supreme Court dismisses E-Levy injunction 

The Supreme Court dismissed the minority’s interlocutory injunction application by three MPs-Haruna Idrissu, Mahama Ayariga and Okudjeto Ablakwa that sought to temporarily put the implementation of the electronic transfer levy (E-Levy) on hold.  In a unanimous decision, a seven-member panel of the Supreme Court held that putting an injunction on the E-Levy would occasion irreparable harm to the state and would not be in the public interest.  “In our opinions, greater hardship will be caused to the state in meeting its developmental obligations to the people,” the court held. According to the apex court panel, in the event an injunction was placed on the implementation of the E-Levy and the substantive case failed, the government could not make up for the taxes lost as a result of the injunction.

It was therefore the considered view of the court that ‘’the applicants and the public would not suffer any irreparable harm if the injunction application was not granted and the substantive case succeeded.’’
It held that the court could order the Ghana Revenue Authority (GRA) to refund the E-Levy already collected to the public in the event the substantive case succeeded and the court declared the passage of the E-Levy unconstitutional.

“If the E-Levy is declared as unconstitutional and null and void, the sum deducted could be refunded by the GRA. On the other hand, if the levy is injuncted by this court and at the end the applicants fail in their substantive case, the GRA will be unable to recover the levies applicable.
“The balance of hardship, therefore, tilts in favour of the respondent (A-G). Accordingly, we dismiss the application for interlocutory injunction,” the court held.

After dismissing the injunction application, the court ordered the GRA to keep “accurate records” of the E-Levy, so that the applicants, the public and the state would not be disadvantaged when the substantive case was determined.  Another reason for the dismissal of the injunction by the court was that by law, all acts by the organs of the state, including Parliament, were presumed to have been done without any irregularity until it was determined otherwise.

The NDC MPs had contended that all the 136 Minority MPs walked out before the E-Levy was passed and, therefore, Parliament did not have the constitutionally required quorum of 138 members to pass the E-Levy. It was the explicit view of the Supreme Court ‘’there was no evidence before the court that 136 NDC Minority MPs walked out of Parliament before the E-Levy was passed.’’
Rather, the judges said that ‘’per the evidence before them, which was the parliamentary proceedings filed by the parties, 266 MPs were present in Parliament on March 29, 2022 when the E-Levy was passed.’’
The judges, therefore, wondered how counsel for the NDC—Mr Edoudze Tameklo ‘expected them to know the number of Minority MPs who walked out when there was no evidence before them to that effect.’
“How do we conjure who walked out? Is it our business to determine an MP who was in the chamber, committee, who had gone to the washroom, etc?” Justice Kulendi asked Mr Tameklo.
“If you say the Minority walked out, how are we to know? Am I supposed to imagine the number of people who are Minority? Who are these people? What is their number?” Justice Torkornoo quizzed.

The Attorney General’s (A-G) submissions

In his submission, the Attorney-General, Godfred Yeboah Dame, urged the court to dismiss the injunction application, arguing that ‘’the number presented by the applicants as the MPs present during the passage of the E-Levy was factually inaccurate, per the parliamentary proceedings.’’
The AG further argued that the injunction had no basis because in the event the substantive case failed, the government could not be remedied for the lost revenue’’ adding ‘’if the injunction was not granted and the substantive case succeeded, the court could order the GRA to refund the money already paid.’’
“This application is totally incompetent and should be dismissed,” the A-G submitted.

GRA to refund wrongful deductions 

Meanwhile the Ghana Revenue Authority was to investigate and refund all wrongful deductions from customers’ mobile money wallets during the first day of the implementation of the Electronic Transaction Levy (E-levy) because of some technical hitches experienced on the day by some consumers on the various networks.

The Head of Project Management Unit at the GRA, Isaac Kobina Amoako assured in a media interview that all consumers who suffered wrongful deductions would be given refund after the completion of the probe by his outfit.  According to him, the authority received feedback from some charging entities including the banks and telecom companies, but a daily report will be run on all transactions to see the way forward.

Mr. Amoako, said “the feedback we got from one of the charging entities is that the configuration for off-net for less than 100 and below is being charged which is in two folds”.  “The first fold is that, 100 and below whether on net or off-net does not attract E-Levy irrespective, but at the moment it’s a technical hitch. So it will be ratified automatically once the transaction is detected.”

He added “they will run an end of day report for all transactions below 100 transactions that were not supposed to attract the levy and were charged. The customers don’t need to do any intervention. If indeed the investigation shows that it was the first hundred cedis or below for the day, the amount will be refunded”.

The Chief Executive of the Ghana Chamber of Telecommunications, Ken Ashigbey said that helplines would be published for aggrieved customers to seek clarity in the payment of the levy.
He however pointed out that some of these hitches were expected, but was confident they will be resolved soon.  “There was an engagement with the charging entities and the phased approached was agreed upon. So we noticed that a lot of these things [hitches] were occasioned after the phased approach was agreed which was just few days to going live with the levy. So more education will happen and the FAQs [Frequently Ask Questions] developed for the project”.  “So if you call any of the call center lines that will be given out later, some more clarity and education will still continue”, he added.

To this newspaper, it is worthy to keep this history in mind just as we must keep that of the Valued Added Tax (VAT).  We will record and play back the e-levy experience.

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