It is not enough that some African governments promise to take a slice of each payment that citizens make with their phones. They also plan to pay private companies tens of millions of dollars to supposedly ensure every crumb was gobbled up. That is the verdict per yet another disheartening decision from Ghana’s government, which seems intent on overtaking Tanzania and Rwanda for the title of the most shameless abusers of the words ‘revenue assurance’ within East Africa.
News Ghana reported on the surprise introduction of a new ‘e-levy’ on all mobile money transactions just a few weeks ago.
Finance Minister Ken Ofori-Atta has announced a new 1.75 per cent tax called E-levy on mobile money and all electronic transactions in the country as a measure to “rope in the informal sector into the tax net”.
It took over an hour for an agreement to be reached between the Justice For Ghana (JFG) protesters and security personnel at the entrance of Parliament House when the group besieged the complexity (sic) to present its petition for scrapping the 1.75 per cent E-Levy on electronic transactions at the forecourt of Parliament.
One Member of Parliament unhelpfully explained that the tax is ‘not compulsory’ because Ghanians do not have to use mobile money. Then the government discovered their budget allowed enough leeway to grant everyone a 0.25 percent tax break. As reported by Public Agenda:
Deputy Majority Leader, Alexander Afenyo-Markin has said that the electronic transaction levy (E-levy) will be reduced from 1.75% to at least 1.5%.
According to him, the reduced charge was captured in the revised version of the 2022 budget submitted by the Finance Minister, Ken Ofori-Atta on Tuesday.
Speaking on PM Express, he said the reduction is a result of the government listening to the concerns of the Minority in Parliament with respect to some concerns raised about the budget.
The first thing anyone does when they identify a lucrative new source of cash is to fantasize about how to spend it. The Ghanian government immediately fantasized about the need to give GHS241mn (USD40mn) to a private company to do revenue assurance for this tax. Modern Ghana reports that Franklin Cudjoe, who previously campaigned against the Ghanaian government’s current deal to pay Global Voice Group (GVG) USD18mn per year to assure revenues from mobile telephony and mobile money, will similarly campaign against the allocation of GHS241mn (USD40mn) in the budget to engage an unnamed third party to assure the collection of taxes from the new mobile money tax.
I think this GHS241 million allocation for this e-levy is needless. It flies in the face of the motive for this tax. So I’m appalled at this decision, when in actual fact there is some supposed entity in place to do the collection.
Cudjoe was referring to the Ghana Revenue Authority (GRA), the official tax collecting agency of Ghana. Does Ghana’s government believe its own taxman is incompetent at collecting tax, which is why they will outsource the assurance to a third party? Or are they outsourcing the collection of the tax itself? It is telling that supporters of the budget allocation seemingly cannot distinguish between:
- paying an external company to collect a tax, and
- paying an external company to assure that all the tax was collected.
It would not surprise me if Ghana’s government will end up paying an external company to both collect the tax and audit their own work, whilst claiming they did this to save money. Modern Ghana reports that former MP Fuseini Issah defended the budget allocation by saying:
It makes sense for the government to budget for the collection of the revenue for the e-levy. In any case, there would be collection and someone or entity has to do the collection and that is why it has been budgeted for and that’s the essence of budgeting.
I think it is the appropriate thing to be done and nothing untoward has been done. If GRA or KelniGvG does the collection, it will be paid for.
Opposition MPs have also spoken against the allocation of so much money to pay for the assurance of a tax that is just a fixed percentage of mobile money transactions that are already audited by GVG. GhanaWeb reports:
North Tongu Member of Parliament, Samuel Okudzeto Ablakwa has stated that there was no need for a third party to conduct revenue monitoring and assurance of the collection of the e-levy…
“So, you have all the numbers you have stated it in the budget, you have done the modelling you know even how much you are expecting to raise. If you have this reality together with all the investment that has been made in the revenue assurance space you do not need a third party”, he said.
Okudzeto should have asked who provided the models that calculated a $40mn bill for revenue assurance before even a single penny has been collected. Rather than spending $40mn on a system to identify all the errors the government will make in collecting taxes, might they not spend some of the money on doing a better job of collecting the money? And now that the tax has already been cut from 1.75 percent to 1.5 percent, will there be a proportionate GHS34.4mn (USD5.7mn) cut in the budget for revenue assurance contracts, or is the price of the contract not connected to the value of the benefits that the third party revenue assurance supplier is supposed to deliver?
In unrelated news, Commsrisk recently reported how GVG, a business which has an opaque international ownership structure seemingly culminating in a notorious Caribbean tax haven and which specializes in signing expensive monopolistic revenue assurance contracts with governments, has launched a new service that promises to process government mobile money transactions. The timing of these two news stories is just a really odd coincidence.
It is understandable that Cudjoe would speak out against yet more suspiciously expensive government revenue assurance deals; whilst he was campaigning against GVG’s audit of telecoms revenues he told the police he had received death threats. That deal was surrounded by controversy, with the government stating that the contract was awarded to GVG because they are a local business, though GVG later chose to fly a large party of Ghanaian regulators to GVG’s offices in Spain for training. Nor did anyone in the government seem apologetic when Ghana’s High Court ordered GVG to destroy huge amounts of data about mobile money transactions because the privacy of users had been violated on the spurious grounds of trying to reduce the spread of COVID-19.
Let us all look forward to seeing the long and varied list of suppliers that will tender for any future Ghanaian government contracts concerning mobile money and revenue assurance. The more companies that openly bid for a transparent contract, the lower the price will be.