Failure of e-levy to meet target will create bigger credibility crisis for the battered economy – Mahama

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Former President John Dramani Mahama has said that the e-levy was presented as the panacea to the economic problems of Ghana.

He said Ghanaians were in fact told, that it would enable government reduce borrowing.

True to the predictions and cautions to government about the overly ambitious revenue and fiscal policy targets, he said, available first quarter data show that those targets will not be met.

In his view, this will no doubt create even bigger credibility crisis for what he described as a battered economy.

“For the entire month of May, the much-vaunted e-levy, which was rammed down the throats of Ghanaians, yielded a paltry GHS 54 million against a target of GHS 475 million for that month representing only 11.3%. The month of June has not offered any sign of improvement as only about GHS 7.1 million had been collected by the first week of the month. These figures demonstrate that so far, the e-levy has been a spectacular failure and has become the mother of all nuisance taxes and I wish to reiterate my earlier promise that we will abolish it in the very first budget statement to be presented under the next NDC administration,” Mr Mahama said while speaking on the economy on Thursday June 30.

Whereas total tax revenue of GHS 14.6 billion was projected to be collected for the first quarter of this year in the 2022 budget, he said GHS 12.8 billion was collected.

This amount, he explained was not enough to meet the debt service payment for the same period which stood at GHS 13.9 billion.

“In other words, all the taxes collected by government in the first quarter of this year, was less than the total amount paid in interest on our debt which was GHS 10.68 billion and amortization of GHS 3.3 billion. Expressed in percentage terms, total debt service for the first quarter of this year was equal to 108% of all the taxes collected by government in the same period.

“It is the reason why government is unable to provide textbooks and other teaching and learning materials for our schools and has raked up huge arrears to statutory funds like the NHIS, District Assemblies Common Fund, GETFund among others. Out of the GHS 1.3 billion that government budgeted to pay domestic contractors in the first quarter of this year, only GHS 38 million was paid whilst absolutely nothing was paid out of the GHS 285 million that was budgeted for arrears clearance in the first quarter of 2022,” the 2020 presidential candidate for the National Democratic Congress (NDC) said.

Recently, a leading member of the New Patriotic Party (NPP), Gabby Otchere Darko said that the e-levy, after its implementation on May 1 2022, is delivering only 10 per cent of estimated income.

The former Executive Director of the Danquah Institute lamented the low revenues in Ghana as compared to the rest of the world and also debt levels which he said are dangerously high.

In a series of tweets on Monday, June 27, he said “What options are open to government? The question should rather be: what option if adopted, will re-inject investor confidence in our economy? Even if we find the $3-5 billion required, will that help? E-levy which was to have given us some 600m by now has done less than 60m.

“Our economy is growing faster than most countries around the world. But, that alone can’t save us as confidence in our ability to service our debts is lowering. We can’t continue to use all the little revenues raised to pay our debts. Very soon we may have to borrow to pay wages!

“Ghana has no food crisis, enough food from our farms, yet food prices have shot up 3-4 times more in our cities, far and over above rising cost of transportation. To make matters worse, global food insecurity is worsening as inflation, from challenges with supply chain, worsens…

“After 5 months of stalemate and bashing, the e-levy, after implementation, is delivering only 10% of estimated revenues; our revenues remain very low as compared to the rest of the world; debt levels dangerously high, cedi, like most currencies, struggling against the US dollar.”

By Laud Nartey|3news.com|Ghana

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