Explore other means of roping in informal sector into tax net – Deloitte Ghana on e-Levy

Deloitte Ghana,  a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax, and related services,  is urging the government of Ghana to come up with more innovative means of roping in the informal sector into the tax net other than resorting to the 1.75% Electronic Transaction Levy (E-Levy).

In a 27-page document on the 2022 Budget and Economic Policy, Deloitte Ghana, among other things, zoomed in on some revenue mobilization measures proposed by the government.

On the proposed Electronic Transaction Levy (E-levy), Deloitte Ghana recommended that as the government works on designing an implementation framework for the E-levy, it also draws on lessons from the challenges other countries have encountered with the imposition of similar digital levies.

It also suggested that government “explores other means of roping in the informal sector into the tax net, which targets actual income generated by the informal sector players.”

”If at all, the E-levy is implemented, the government could consider making this policy a temporary measure to avoid the erosion of gains made in the financial inclusion policy.”

Common Platform for property rate collection

On the implementation of the Unified Common Platform for property rate administration, Deloitte opined that timely implementation of measures that will improve property rate administration will enhance revenue generation at the local government level.

“While this task has traditionally not been part of the GRA’s portfolio, the GRA’s experience in assessing and collecting taxes can be an important factor to significantly improve property rate administration in Ghana if the necessary monitoring and control mechanisms are implemented.”

It expects the implementation of the UCP, together with data from the recent Population and Housing Census, to provide a comprehensive database for the proper administration of property rates going forward.

“Our tax regime requires some stability. Inasmuch as businesses believe in paying taxes to support the government, they also need certainty to plan their activities, Lead Tax Partner at Deloitte Ghana, George Donkor said at the  Deloitte Economic Dialogue Webinar on the 2022 budget-themed ‘Digitalisation as a catalyst for economic recovery and growth’.

Deputy Finance Minister hints at a review of the implementation strategy for e-Levy

Also speaking at the Deloitte Economic Dialogue Webinar on the 2022 budget, a Deputy Minister of Finance, Abena Osei-Asare, hinted that the government may be reviewing the implementation strategy of the proposed Electronic Transaction Levy (E-Levy) in the coming days.

“But at the same time, it [Government] is also concerned about raising revenue to reduce our dependence. So we need to look at it that way.”

“This is a very good initiative by the government and I encourage everyone to engage government and support us to implement this very good measure that will rake in close to about GHS 7 billion to help in the development agenda in terms of youth employment, development of road infrastructure and cybersecurity,” she added.

She further noted that the government is not oblivious of the concerns being raised over the proposed E-levy, adding that “I believe that some form of a position will be taken by the government in shaping the implementation strategy and announcement on the E-Levy.”

15% increase in fees and charges for government services

Commenting on the proposed review of fees and charges for the services of Ministries, Departments, and Agencies (MDAs) with an average increase of at least fifteen percent (15%) effective 1st January 2022, Deloitte Ghana said it foresees the substantial contribution it will make to government revenue.

“We are equally mindful of the potential unintended consequence of this policy, making government services inaccessible to financially vulnerable persons in society. Once implemented, the fees and charges for services of the MDAs should reflect the current market conditions.”

“Also, with the annual automatic adjustment tied to the annual average inflation rate, there will be some level of certainty with respect to the expected increment in fees and charges payable for the services of the MDAs.”

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