IMF Bailout: E-levy will not be scrapped!

The Finance Ministry has disclosed that government will not terminate the 1.5% levy on electronic transactions, despite its application to the International Monetary Fund (IMF) for economic assistance.

This was contained in a statement from the Ministry, addressing key questions regarding government’s ongoing engagement with the Fund.

Regarding the controversial levy, the Ministry explained that government will add the proceeds from the levy to the support from the IMF to salvage the economy.

Addressing the question of whether the levy will be scrapped, the Ministry said, “NO. The IMF lending to Ghana will be for balance of payments support (i.e. to shore up the international reserves).

“Government is committed to ensuring the smooth operationalisation of all taxes including the e-levy to ensure that in addition to the IMF’s resources, government can continue to support its developmental goals on its own while ensuring that tax-to-GPD ratio increases to the peer range of 16%-18%”.

It continued: “An IMF-supported programme is likely to encourage the government to investigate the factors hindering the success of the e-levy (including by providing technical assistance if needed) and come out with strategies to improve it”.

Not Failed

Meanwhile the Minister for information Kojo Oppong Nkurmah has ruled out suggestions that the electronic transfer levy has failed.

According to him, although government had earlier insisted that seeking a bailout from the International Monetary Fund was not an option, it had no choice but to take the decision.

In an interview on the Citi FM, Mr. Oppong Nkrumah said the E-Levy, which was government’s solution to Ghana’s economic crisis, has not done as well as expected so far because it has faced stiff opposition.

He explained that the tax, just like any other revenue generation measure, will need to be given time to be widely accepted, hence the need for government to take the immediate action to alleviate the suffering of Ghanaians while the home-grown solution gains momentum.

“Whenever you introduce a revenue measure, it takes a while for it to hit its optimal level. More so, the E-Levy has had some loopholes that have to be plugged out by the GRA. The Levy has been heavily bastardised, and so people try to avoid it, and so we are unable to get the full value of what we are looking for. We will have to give it room to reach its optimal level. While at it, we cannot wait for it to reach that maximum level because we have obligations to meet” he said.