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Ghana to resubmit electronic payments tax to parliament this month

01/20/2022 | 02:38am

ACCRA (Reuters) - A proposed tax on digital transactions in Ghana whose passage was delayed by a brawl on the floor of parliament in December will soon be resubmitted to lawmakers, the finance minister said on Wednesday.

The 1.75% "e-levy", which would includes taxes on mobile money payments, has been met with fierce resistance by some politicians and the public since it was proposed in November.

Supporters say the levy will widen the tax base to ease Ghana's growing debt burden, while opponents say it will disproportionably impact lower-income communities and those without access to banks.

Controversy over whether to include the levy in the national budget held up its passage for weeks and ultimately sparked a fist fight among more than a dozen lawmakers during parliament's final session of the year last month.

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

Parliament reconvenes on Jan. 25.

"The e-levy would not only ensure that we move towards a more sustainable debt level but would also ensure that we have the revenues to sustainably invest in entrepreneurship, youth employment, cyber security, digital and road infrastructure," Ofori-Atta said.

Economists worry that Ghana's double-digit fiscal deficit could soon spiral into a full-on debt crisis, despite the economy's quick rebound from setbacks caused by the COVID-19 pandemic.

Fitch Ratings last week downgraded Ghana's sovereign rating from B to B-, citing concerns it will likely be unable to issue bonds on international capital markets in 2022. Prospects for doing so in 2023 are uncertain, the ratings agency said.

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

"We are paying the price for low resource mobilisation through insufficient capital investment," Ofori-Atta said. "As such, we have had to borrow more than others."

($1 = 6.26 cedi)

(Reporting by Christian Akorlie and Cooper Inveen)

© Reuters 2022
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