E-levy only contributes 1.4% to GDP
E-levy only contributes 1.4% to GDP, hence it won't help us get out of the current recession. — Seth Terkper
E-levy only contributes 1.4% to GDP, hence it won’t help us get out of the current recession, said by Seth Terkper
Seth Terkper, a former minister of finance, has claimed that given the weak situation of Ghana’s economy right now, the amount of money allegedly collected by the E-levy is irrelevant.
He pointed out that the E-levy was only expected to generate GHS100 billion in revenue, or about 1.4% of the GDP.
Speaking about the issue on Joy News’ “AM program” today, Mr. Terkper said that while only 13.5% of the anticipated 20 percent income has been realized, the E-levy was previously taken into account when generating gross revenue.
“My quick response is that it won’t matter anymore. The E-levy is already included in the GHS 100 billion equivalent of 20 percent GDP in the context of the economic situation we find ourselves in at the moment, and I made this point first. However, all we can do is raise 13 percent to 15 percent of GDP revenue, which has remained constant at that level.
Our tax collection is somewhat below average, so if you take into account the deficit we faced, the potential growth in debt, and the borrowing, the E-levy was already taken into account. In actuality, the E-levy contributes 1.4 percent of GDP. How can 1.4 percent GDP benefit the economy when the deficit itself was, according to the administration, between 11 and 13 percent and is set to reach 15 percent? In answer to the host’s query on which figure to use—Gabby Otchere Darko’s 10% or IMANI Africa’s 17 percent revenue—he said.
He continued by saying that the E-levy would not assist to solve the present economic situation.
Even if the tax hadn’t yet stabilized, he pointed out that whether it generated 10%, 50%, or 70%, the budgetary situation would only become worse.
“If we look at the government’s medium-term plan, which is included in the current budget, we can see where the administration intends to place this economy in terms of GDP percentage. It is still 1.4 percent GDP there as well. In actuality, it stays at 1.4 percent from 2022 to 2025. If the government had anticipated it, I would claim that the E-levy did not, in fact, help us resolve the problem, as I had repeatedly said. Whether it is 10%, 50%, or what we could be seeing as 60-70 percent since the tax has not yet stabilized, it will just aggravate the budgetary position because, despite all that was claimed, it has not been meaningful, he added.