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E-Levy yields GH¢93.7m in 2 months

E-Levy yields GH¢93.7m in 2 months

In the first two months after it went into effect, the government raised GH93.7 million in income from the Electronic Transfer Levy (E-Levy).

The amount raised in May and June of current year fell short of the budgeted goal of GHC1.46 billion by around 93.59%.

As a result, in the Mid-Year Fiscal Policy Review published last Tuesday, the government reduced the revenue objective for the levy from the initial yearly projection of GH6.96 billion to GH611 million.

Data from the fiscal policy assessment on the revenue side showed that the lower-than-targeted result mirrored the performance of nearly all the revenue lines.

According to the statement, “Total income and grants consisting of domestic revenue, tax revenue, and other main revenue streams turned out lower than planned, after delivering GH37.8 billion in the first half of the year from the target of GH43.4 billion.”

The new fiscal policy statement stated that this “mirrors a pattern that has plagued the economy since the beginning of this year.”

The mid-year budget review, which also marginally reduced spending from GH135.6 billion to GH133.84 billion, was reflected in the fiscal policy review, which revealed that the revenue projections for the year had been trimmed from GH100.5 billion to GH96.84 billion.

Changing budgetary premise

Ken Ofori-Atta, the minister of finance, said the government had observed some significant changes in its budget assumptions that had resulted in lower revenues, higher interest payments, and changes in interest and currency rates when he presented the 2022 mid-year budget review on Monday.

He said that the government had promised to steer toward fiscal sustainability and growth in the 2022 budget, and that promise had been reiterated in the Mid-Year Fiscal Policy Review.

The Finance Minister said the government was committed to staying within the appropriation for 2022.

Despite the weak external challenges and underwhelming revenues, he declared, “We are not requesting additional cash in this Mid-Year Review.”

As we reduce spending, Mr. Ofori-Atta stated, “We are resolved to exploit the windfall from the upstream petroleum sector efficiently to make up for our income gap and aggressively boost our revenues.”

rate of collecting reviews

Before the mid-year budget review, Prof. Peter Quartey, the director of the Institute of Statistical, Social, and Economic Research (ISSER) at the University of Ghana, urged the government to evaluate the E-Levy to make it more affordable for more Ghanaians to contribute to it.

He claimed that lowering the collection rate from 1.5% to 0.5%, stepping up education efforts, and taking further steps will promote compliance and close the income generating shortfall shown in the year’s first quarter.

He explained that due to the high rate, low level of education, and structural flaws in the levy, the majority of Ghanaians were avoiding paying the tax.

A more affordable and organized E-Levy, according to Prof. Quartey, would attract more people who were required to pay but weren’t.

In order to increase tax compliance and close loopholes, he recommended that the E-Levy rate be reduced and that education efforts be stepped up.

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Give E-Levy some time

Nevertheless, despite the E-failure Levy’s to produce the anticipated effects, the Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, stated at a news conference last Monday that it was still not time to abolish it.

The governor claimed that the levy’s exclusions may have contributed to the low amount of revenue that has been raised thus far, but that over time, things would improve.

“I don’t believe it’s time to abandon E-Levy. The degree of exemptions provided by the levy and its law has been the topic of discussions to which I have had access, according to Dr. Addison.

In response to a query on whether the three-month-old charge was ready to be dropped, he replied, “So, I know there is some work which is currently ongoing to relook at those exemptions; and perhaps, when that is completed, the levy will bring in more revenue than currently.”

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