Two economists namely Professor Peter Quartey, who is the Director of the Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana, and a Senior Economic Analyst at the Natural Resource Governance Institute, Dr Alex Ampaabeng, have both proposed that E-levy should be replaced with a broader electronic commerce and a digital service tax.
Prof. Quartey noted that most of the taxes, including E-Levy, have outlived their purposes. He explained that since the tax did not yield the expected revenue, they fell into the category of nuisance taxes and must be scrapped.
“For instance, National Fiscal Stabilisation Levy underperformed in terms of its annual target by 56.7 per cent while COVID-19 Health Levy dropped by 17.8 per cent. E-Levy also missed its target by more than half in the period between January and June this year. It is obvious that the levy is not yielding the desired results” he said.
The Director of ISSER underscored the need for the E-Levy to be replaced with a more comprehensive tax that could capture all business transactions on the Internet.
He explained that the E-Levy is not performing well because its focus is narrow and should rather be converted into what he called an “e-commerce tax” to capture more transactions in the electronic space.
“With an increased scope, coupled with a reduced rate, I think it will encourage compliance because it would be cheaper for more Ghanaians to contribute to support the government’s growth agenda,” Prof. Quartey added.
The Director of ISSER noted that most Ghanaians are evading the levy because of the high rate, limited education and loopholes associated with its structure. Prof. Quartey added that a cheaper and well-structured e-commerce levy would rope in more people who had to pay but were not doing so.
Dr Ampaabeng, on his part, said it is time for the government’s policies to be heavy on tax reforms to create the platform to further enhance digital administrative efficiencies with regard to revenue collections.
Consequently, Dr Ampaabeng stated that the government and its revenue mobilizing agency must consider reviewing the tax structure with a special focus on digital taxation and e-commerce operations in order to generate enough revenue to bridge the anticipated revenue shortfall at the end of the year.
“For the multinational tech giants, I will go for a low digital service tax (DST) on gross turnover for a start. For example, there should be between three and six per cent tax on their gross receipts,” Dr Ampaabeng said.
“With this, we can capture the revenue from Facebook, Youtube, TikTok, among other platforms,” he explained.
He added that the recently introduced Value Added Tax (VAT) on Meta transactions was a good step but it should go beyond that and rather tax the gains of the company.