The political opposition in Ghana has filed a lawsuit with the country's Supreme Court after lawmakers passed a controversial tax despite the party’s walk-out from parliament. Ghana's government says the new tax on electronic transactions and transfers will raise money for the pandemic-hit economy. But critics say the tax will discourage trade and adds to the public’s economic burden.
Ghana’s opposition National Democratic Congress (NDC) on Wednesday filed suit with the Supreme Court to block the government-backed tax on electronic transfers and transactions.
The NDC has called the so-called “E-Levy” of 1.5% “regressive” and unlawful because there was no quorum in parliament when it was passed. Opposition lawmakers had walked out of the proceedings in protest.
NDC lawmaker Mahama Ayariga, one of the plaintiffs, told VOA he is hopeful the Supreme Court will declare the tax unlawful.
“The speaker and the majority side knew they didn’t have the number; they hadn’t met the quorum and yet they proceeded and purported to have voted to pass the E-Levy... And if there wasn’t a quorum, there couldn’t have been a decision and so there could also not have been an E-Levy passed. So, the president has nothing before him to sign into law,” he said.
In his state of the nation address on Wednesday, Ghana’s President Akufo-Addo said the new tax would boost the economy as it recovers from the COVID-19 pandemic.
“Despite the protracted and sometimes acrimonious nature of proceedings, I am happy that the House has, finally, found it possible to pass the E-Levy," he said. "I believe the levy is going to make a significant contribution to revenue mobilization and the management of the economy, and I want to thank members of the House for making this possible.”
Authorities say the tax is expected to raise about $900 million by the end of the year.
But most ordinary Ghanaians are opposed to the new tax, which will affect anyone using mobile money services.
Accra-based second-hand clothing trader Sophia Anane says it will harm her business.
“What are they using the revenue we generate from cocoa and oil for? The government wants to tax them on what little money they’re making in addition to what the telecommunications companies also deduct as commission. What is our fate?" she asks.
Some economists argue the government is wrong to burden Ghanaians with new taxes while they are still recovering from pandemic restrictions and disruptions.
Director of research at the Accra-based Institute of Economic Affairs (IEA) John Kwakye the government should instead focus on improving tax collection.
“There are several loopholes in our tax system that if they were plugged, we’ll be able to raise our tax to GDP ratio to something like 20%. We’re now doing just about 12%. So, to me, if these other measures were being taken, I don’t think that even the E-Levy will be necessary,” he said.
Ghana’s Supreme Court is expected to hold a hearing on the opposition’s challenge to the new tax in the coming weeks.