Seth Terkper, a former Minister of Finance and Economic Planning, has warned that the country faces the risk of having its fiscal deficit widened if Parliament fails to pass the government’s proposed Electronic Transaction Levy (E-Levy).
Sharing his views on the current economic situation in the country during a radio interview, Mr Terkper also said the government should take a decision on the issue of the proposed reversal of benchmark value discounts.
Making allusion to the fact that projected revenues from these proposals were factored into the 2022 Budget Statement and Economic Policy of the government, he said: “So as long as we don’t take a decision on that, it is affecting the budget, and it is gradually sending uncertainty to the market because they are saying ‘Hey! You have done a budget’.”
“The deficit is 55 per cent but they are supposed to collect 80, right? We are talking about 30 extra; within that 30 extra, or let’s say 25 extra because they did about 57. So within the extra amount that they are supposed to collect is the benchmark because the values were supposed to go up, so that they can collect,” he explained.
Ken’s 20% cut
On the decision by Minister of Finance, Ken Ofori-Atta, to cut budget expenditure by 20 per cent, without recourse to parliament, Mr Terkper said the man who took over from him cannot be faulted, saying this is not the first time a finance minister has taken such action.
“You know, the Minister just announced 20 per cent reduction. Are we reviewing Budget mid-year in January already? Because to cut expenditure by 20 per cent is not a small amount of money. It is about 27 billion out of the 135 or 137 billion, right? And that is a significant amount of money.
“It didn’t go to Parliament. It is not just this government. You remember, when we read a budget in 2015 and then crude oil prices fell by March, former President John Dramani Mahama was sending me to Parliament to go and explain to the nation; that was March, right? So I am not faulting that; it’s being said in January; they should tell us that there is a real problem with the fiscal situation,” he said.
As Parliament resumes sitting today from recess, all eyes are on the legislators as the people they represent wait to see whether the E-levy bill will be passed or not.
Before the going on recess in December last year, the House turned unruly during voting to consider the bill.
MPs from opposing sides of the House were at each other’s throat following an attempt by the First Deputy Speaker of Parliament, Joseph Osei Owusu, who was presiding over proceedings, to vacate his seat momentarily to enable him join in the head count voting.
The Government of Ghana proposes to impose a 1.75% tax on a variety of electronic transactions, including mobile money transfers exceeding GH¢100.
Minority Members of Parliament had vowed to vote against the levy, while mobile money agents, who also opposed the levy, embarked on a demonstration and suspended their services in protest against moves by Government to proceed with implementation.
The Minister of Finance, Mr Ken Ofori-Atta, disclosed at a press conference in Accra last Wednesday that, following consultations, the E-Levy bill would be re-submitted to Parliament when sitting resumes.
“We look forward to joining hands with our Honourable Members of Parliament to approve the E-Levy on a consensus basis, so we can collectively address the big issue of unemployment,” he said.
Mr Ofori-Atta described the E-Levy as a necessary tool to increase Ghana’s tax-to-gross domestic product (GDP) ratio from around 13 per cent to 16 per cent.
He said it is also a credible measure to ensure that all Ghanaians contribute their quota to the economic recovery that is currently underway.