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The government’s proposed 1.75 per cent E-levy is a lazy and backward way of mobilising money to run Ghana, economist Kwame Pianim has told the Finance Ministry.
“First of all, I think it is a very backward step”, Mr Pianim said, noting that it will erase all the gains made by the government to digitalise the economy.
He said mobile money, for instance, “has brought financial inclusion to people in the villages who cannot go to the bank and open a bank account”.
“You know what MTN and others are doing? They go to the bank and open an E-wallet for you. We don’t control it: they do. They count it as if it is their money. It is not their money”, he said.
The levy is projected to raise about GHS6.9 billion a year.
However, Mr Pianim said: “A little bit more consultation would have shown the government that don’t go there”, adding: “You want to raise GHS6 billion? Is GHS6 billion worth undermining the … effort that this government has put in digitalising things?”
“It is a lazy way of sitting” in the Ministry of Finance’s air-conditioned office and saying, “Oh I want money, oh let me grab this”.
“The Ministry of Finance is not a budget and expenditure ministry; it is for development; it is for finance. So, you are looking at what will grow the economy, not what will give you money …” he told Accra-based Asaase FM.
Meanwhile, Majority Leader Osei Kyei-Mensah-Bonsu has said without the proposed 1.75 per cent e-levy, the government can neither maintain the existing roads nor build new ones.
Addressing journalists in Accra on Wednesday, 15 December 2021, the Minister of Parliamentary Affairs said he found it “surprising” that the Minority Caucus and the opposition NDC are fighting the e-levy.
He said the cost of borrowing has “escalated” and the country’s debt-to-GDP ratio has also risen as a result of the COVID-19 pandemic, “so, we must look inward to mobilise resources for the country to develop, to build our roads, to build clinics, health facilities, to build educational facilities, to deliver potable water and one of the ways to do this is by the introduction of e-levy and people say: ‘No, we would not allow you to borrow outside, we will not allow you to also raise revenue from inside this country’”.
“So where are we going? We want development or we don’t want development? Do we want our roads to be built or not to be built?” he asked.
The Suame MP observed that the “cost of road construction and road maintenance has escalated over the past 20 years”.
“Why? Because over the past 20 years, the road network of this country has doubled”, he answered.
“When President Kufuor took over the administration of this country, the total road network was 39,000 km. When President Kufuor was leaving the scene, the road network had almost doubled – from the 39,000 km, it had increased to 69,000 km within eight years. … The NDC assumed the reins of power, they added on to that; from 69,000 km, it went to 73,000 km, an additional increase of 4,000 km”.
Also, he said President “Akufo-Addo’s first four years increased from 73,000 to 78,000 km”.
“So, over just two decades – from the year 2000 to 2021 – the road network has increased by more than 100 per cent”, Mr Kyei-Mensah-Bonsu noted, adding: “We need to maintain them, we need to service them, we need to build new roads”.
“So, from independence up to 2000, we had only 39,000 km [of road]; just 20 years after, it’s more than doubled to, as we speak today, 79,000 km. We need to maintain them”.
“Where do we have the money to maintain them if we don’t mobilise resources from within? Today, as we speak, local road contractors, the government is indebted to them to the tune of about GHS4.5, GHS4.5 billion. We’re not having money to pay them”, he bemoaned.
He added: “The e-levy, we are told – in fact, the Road Fund contributes something but it’s not much; the road tolls, yielding altogether about GHS72 million a year. What is it going to do? But, in the meantime, that section of the road where you have the road tolls, often because they stop there, the roads end up being warped and furrowed. So, you have ridges and furrows at that place”.
“So, every year, you have to maintain that portion of the road. It’s the GHS78 million that you collect that you are going to use some to even maintain those sections of the road. How much is left?” he lamented.
“The e-levy, we are told, is going to yield about GHS8 billion as opposed to GHS78 million. That will yield enough for us to be able to do the roads. Of course, I do know that it’s not everything that is going to be used for the construction of roads but if you have GHS8 billion, GHS9 billion from the e-levy, it’s going to be substantial for you to be able to engage in development programmes and projects. So, the dialogue sessions indicated to us that we needed to do this”, he added.