Ghana to resubmit e-payments tax to parliament this month

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ACCRA — A proposed digital transaction tax in Ghana whose passage was delayed by a fight in parliament in December will soon be resubmitted to lawmakers, the finance minister said on Wednesday.

The 1.75% “electronic tax”, which would include taxes on mobile money payments, has faced fierce resistance from some politicians and the public since it was proposed in November.

Proponents say the levy will broaden the tax base to ease Ghana’s growing debt burden, while opponents say it will disproportionately impact low-income communities and those without access to banks .

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Controversy over whether to include the levy in the national budget delayed its passage for weeks and eventually sparked a fight between more than a dozen lawmakers during the last parliamentary session of the year last month.

The government will submit the e-tax to parliament as a separate bill by the end of the month, as Ghanaian law requires new taxes to be included in the budget, Finance Minister Ken Ofori said. Atta during a press briefing on Tuesday.

Parliament resumes on January 25.

“The electronic direct debit would not only ensure that we are moving towards a more sustainable level of debt, but would also ensure that we have the income necessary to invest sustainably in entrepreneurship, youth employment, cybersecurity, digital infrastructure and roads,” Ofori-Atta said.

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Economists fear Ghana’s double-digit budget deficit could soon turn into a full-blown debt crisis, despite the economy’s rapid rebound from the setbacks caused by the COVID-19 pandemic.

Fitch Ratings last week downgraded Ghana’s sovereign rating from B to B- over concerns that it is unlikely to be able to issue bonds in international capital markets in 2022. Prospects of doing so in 2023 are uncertain, the rating agency said.

Ghana’s debt-to-GDP ratio was 78.4 percent in November, Ofori-Atta said. The total debt burden currently stands at nearly $6 billion (37.5 billion Ghanaian cedi).

“We are paying the price for poor resource mobilization through insufficient capital investment,” Ofori-Atta said. “As such, we have had to borrow more than others.” ($1 = 6.26 cedi) (Report by Christian Akorlie and Cooper Inveen 😉

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