Ghana parliament approves e-tax of 1.5% after opposition protest

PUBLISHED: Tue, 29 Mar 2022 16:38:50 GMT
Cooper Inveen
A customer holds his mobile phone as he prepares to pay for mosquito sprays at Makola market, one of the country’s largest trading centres in Accra, Ghana March 26, 2022. REUTERS/Francis Kokoroko

ACCRA, March 29 (Reuters) – Ghana’s parliament approved a new 1.5% tax on electronic payments, known as the “e-levy”, on Tuesday after the opposition walked out in protest.

Finance Minister Ken Ofori-Atta proposed the e-levy in November to widen the tax net, but opposition was so fierce that it caused a brawl in parliament a month later.

Critics believe the e-levy will price lower income people and small business owners out of the digital economy.

Ruling MPs re-introduced the bill as a surprise on Tuesday, when many opposition MPs were not present, a move analysts have previously said would be one of the only ways for the tax to pass. Read full story

Read more: After Moody’s cut, Ghana finance ministry says ratings agencies biased against Africa

It was expected to be re-submitted next week, but parliament speaker Alban Bagbin said it should be treated as urgent business and fast-tracked it.

The move sparked outrage among opposition parties, who refused to take part in the vote.

The tax, which would cover mobile money payments, bank transfers, merchant payments, and inward remittances, could raise up to 6.9 billion Ghanaian cedi ($926 million) in 2022, according to official estimates.

Ruling party officials see it as the panacea for a raft of financial woes that could spark an economic crisis.

Consumer inflation reached 15.7% year-on-year in February, the highest since 2016. The cedi depreciated some 20% against the dollar this year, second only to the Russian rouble, and public debt hovers around 80% of gross domestic product.

(Reporting by Cooper Inveen; Writing by Nellie Peyton and Sofia Christensen; editing by David Evans)

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