Read Time: 3 minutes         Ruling party prepares for fight with civil society and opposition over new electronic transaction tax When police in Tema charged Oliver Barker-Vormawor, a convener of the #FixTheCountry movement, with…


        
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Africa Confidential – GHANA; Activists rally against E-Levy as government launches consultations


Read Time: 3 minutes
Ghana's E-levy to generate GH₵6.9 billion next year to pay contractors |  News Ghana

Ruling party prepares for fight with civil society and opposition over new electronic transaction tax

When police in Tema charged Oliver Barker-Vormawor, a convener of the #FixTheCountry movement, with treason felony on 11 February, they fuelled a wider civil society campaign against the government’s plan for an electronic transaction tax (E-Levy) (AC Vol 63 No 4, Ofori-Atta bets on the E-Levy, rejects IMF). The Barker-Vormawor case has become a cause célèbre, focusing more attention on opponents of the tax and critics of the government’s human rights record. Sulemana Braimah, Executive Director of the West Africa Media Foundation, has written to President Nana Addo Dankwa Akufo-Addo raising concerns about a growing sense of official intolerance (AC Vol 63 No 1, Opposition steps up disruption).

On 18 February, an application by Barker-Vormawor’s lawyers for habeas corpus was dismissed by the Tema High Court. A popular activist, Barker-Vormawor had earlier referred to a ‘coup’ on a social media post if the E-Levy was passed by Parliament. He later explained he had enlisted the help of the International Lawyers Project to petition the courts on the E-Levy and that the agreement with them was a ‘Huge coup’. Ghana’s police were not convinced by his explanation.

Hours after Barker-Vormawor’s arrest at Kotoka International Airport, police said the charges referred to ‘a post he allegedly made on a social media platform to the effect that he would stage a coup if the E-levy Bill is passed by Parliament’. The post ‘…contained a clear intent…to subvert the constitution of Ghana’. Initially, Barker-Vormawor was charged with a breach of the peace at the airport, after he arrived from Britain. That is a misdemeanor. It’s unclear how that evolved into a charge of treason.

Akoto Ampaw, lead counsel for Barker-Vormawor and a former colleague of President Akufo-Addo, describes the treason charge as ‘cynical’ and with ‘no factual basis’. The case against Barker-Vormawor has been adjourned until 28 February and he will be in custody until then. Kwasi Prempeh, Executive Director of the Centre for Democratic Development (CDD-Ghana), labelled the government’s treatment of Barker-Vormawor as self-defeating: ‘The reaction [of the Police] is far more destabilising and damaging than the silly post. Power is getting jittery, needlessly so.’

For the government, the main problem is its struggle to raise domestic tax revenues, having earlier positioned itself as pro-business and low taxes. Interest charges on public debt this year will consume over half of forecast tax revenues. And the Treasury says it may have to cut up to a fifth of state spending to meet its fiscal targets. Its plan to introduce a 1.75% E-Levy on all electronic transactions is central to its plans to balance the books. But sensing a chance to mobilise wider discontents with economic conditions, the opposition National Democratic Congress and civic activists are fiercely campaigning against the tax.

In November, the #FixTheCountry movement picketed Parliament asking MPs from both sides to reject the 2022 Budget with the E-Levy proposal (AC Vol 62 No 24, Bonds and budget blockers). Earlier this month the NDC organised street protests in Accra against the tax. The proposed E-Levy would be applied to mobile money payments, bank transfers, merchant payments, and inward remittances. All charges are to be borne by the sender except for incoming remittances where the recipient will pay.

Finance Minister Ken Ofori-Atta says the country’s digital transactions for 2020 were over GH¢500 billion (about US$81bn) in 2020 compared to GH¢78bn (US$12.5bn) in 2016. The government is projecting revenues from the new tax of over GH¢6.96bn (US$1.1bn) in 2022, and about GH¢26.90bn (US$4.5bn) from 2023 to 2025. It says it will widen the tax net and further formalise the economy along with the new national digital identity card.

But critics such as Abdallah Ali-Nakyea, a tax expert at the University of Ghana, warn that the economic risks of the new tax, hitting the service sector whose growth has been accelerated by digital transactions could outweigh the higher revenues. Others argue that all transaction taxes should be targeted at the recipient, not the sender; others argue for far tougher measures to get some of Ghana’s wealthiest citizens to pay income tax.

The government has been holding town hall meetings in all the regional capitals to hear citizens’ concerns. But few expect significant concessions. As far as the political arithmetic goes, the ruling New Patriotic Party is confident it can muster the votes, with the help of a few dissident NDC MPs, to push the new tax through parliament on a simple majority.

18TH FEBRUARY 2022


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