Ghana’s 1.7% Tax On Electronic Transactions Harmful, Says Prof. Ukpong

Ghana’s intention, as indicated by its Finance Minister Ken Ofori-Atta, to levy electronic transactions will harm its already struggling economy.

Leo Ukpong, a professor of Financial Economics and Dean, School of Business and Entrepreneurship at the American University of Nigeria, said this much in an exclusive chat with Prime Business Africa (PBA).

Ghana government intends to introduce a levy on electronic transactions, to raise more revenue from the private sector. The new levies target mobile money payments, bank transfers, merchant payments and inward remittances, which will attract 1.75% charge on their value.

But this, analysts say, would be very unpopular and could asphyxiate the fintech sector. They, however, argue that the Ghanian government could be borrowing a leaf from Nigeria experient and therefore most unlikely to reconsider its move.

Asked what he thinks of the matter, Professor Ukpong of the American University of Nigeria told Prime Business Africa that transfer of money from one location to another does not generate any economic activity but merely speeds up the velocity of money around the system.

“Economic activities,” according to Prof Ukpong, “are generated by production of goods and services. With this in mind, Ghanaian government’s policy to impose tax on money transfer is purely a decision to benefit the government and not the economy.

“In my opinion, Ghana should focus on keeping the funds within their economy, foster economic policy to increase the production of goods and services, and then design growth sustainable tax policies (rate) to tax the increased goods and services generated within the economy.”

The Nigerian Professor noted that, although “governments in this part of the world would be happy to tax everyone to the grave irrespective of what happens to the economy,” helping the growth of productivity should be the emphasis.