The Ghana Hotels Association has backed government’s introduction of the electronic transaction levy (E-levy) that is expected to come into effect beginning next month.

The Electronic Levy Bill was passed by Parliament on Tuesday, March 29, 2022 despite a walkout by the minority group in the House. President Nana Akufo-Addo assented to the bill into law and it’s expected to become operational from May 1.

Speaking to the Business and Financial Times in an interview on the introduction of the levy and its impact on the continuous patronage of hotels across the country, the President of the Ghana Hotels Association (GHA), Dr. Edward Achah-Nyameke Jnr., acknowledged that the country is in a dire economic situation and in need of cash to prevent the economy from total collapse.

“Government is going through some financial challenges and it felt that that was one of the ways to alleviate the situation. And so technically, we are not against the e-levy. We are happy that it has been passed to get money into the pockets of people so that our businesses can also flow,” he said.

Finance Minister, Ken Ofori-Atta, announced a reduction in the levy to 1.5 percent from the initial 1.75 percent proposed. Providing some details for the reduction, Mr. Ofori-Atta said telcos in the country agreed to reduce their charges by 0.25 of a percentage point to bring their charges to 0.75 percent.

He explained that the bill’s objective is to broaden the tax base of the country by imposing the levy on electronic transfers to enhance government’s drive for revenue mobilization.

The E-levy was introduced by government in the 2022 Budget for basic transactions related to digital payments and electronic platform transactions. The rate will apply to electronic transactions that are more than GH¢100 daily.

Meanwhile, former Finance Minister, Seth Terkper, expressed doubt over the government’s ability to meet the revenue target despite the approval of the E-levy into law. The total projected revenue for 2022 of GH¢100 billion, represents a 39 percent increase over the revised revenue target of GH¢72 billion in 2021.

The implementation of the E-levy, which will commence in May 2022, is expected to fetch government about GH¢6.9billion this year.

“The estimate for 2021 was GH¢72 billion. When the 2022 budget was presented, it changed to GH¢70 billion. The Bank of Ghana’s MPC report suggests that the revenue the country could generate in 2021 was GH¢67 billion. If it is GH¢67 billion, then, we have fallen short of the original target by about GH¢5billion.

So the question that comes up is, if all that GRA could bring is GH¢67 billion in 2021, and we are expecting to collect about GH¢30 billion more, that represents about half of what GRA brought in last year. So you will agree with me that this year’s target is ambitious, and it includes the E-Levy,” he stated in a Citi Business News interview.