Ghanaians urged to embrace e-levy, VAT changes to restore economy

An Economist, Dr. Adu Sarkodie is urging Ghanaians to embrace the proposal of the reduction of the new electronic levy (e-levy) charge from 1.5 percent to 1 percent and the Value Added Tax (VAT) Rate of 2.5 percent as measures taken to revive the economy.

He explained that the government is in dire need of money as such, the proposals made while the Minister of Finance, Ken Ofori-Atta presented the 2023 national budget will serve as a short-term measure to bounce the economy back on a healthy foot

“The government is facing serious fiscal challenges. So, in my view, this VAT and the present state of e-levy will be the short-term revenue measures for the government, he opined.

Speaking as a panellist on Citi FM/TV news analysis programme, The Big Issue on Saturday, 26th November 2022, the economist added that, should the new e-levy be rolled out, it will in turn have an impact on other policy interventions including the Livelihood Economic Empowerment Programme (LEAP), Capitation Grant, School Feeding and the Free Senior High School (SHS)

“Even though the government is charging 1 percent on the Gh¢50 and Gh¢100, it is going through another door to increase the Safety Net, the LEAP, through Capitation Grant, School Feeding the Free SHS is still there. So on one hand, it is just trying to cushion the poor”, the economist averred.

Dr. Sarkodie further indicated that the government needed to discharge responsibilities of broadening its infrastructure base which requires substantial revenue, adding that, the e-levy can be abolished after its intended purposes have been served temporarily.

According to him, “The government is in serious need of revenue. So let us admit it as a country. Yes, there have been some mistakes in the past. So, let’s help the government to pay these taxes now. If after two years they are able to get per my calculation, if we get about 11 billion from the property rate, which is far more than the 2 billion proceeds from the e-levy then they can abolish the e-levy and reduce the VAT”.

On Thursday, 24th November 2022, Mr. Ofori-Atta announced “the headline rate of the e-levy will be reduced to one percent of the transaction value alongside the removal of the daily threshold”.

Again, he said plans have been made to increase the VAT rate by 2.5 percent to support roads and digitalisation agenda.