Transaction tax

How the VAT was removed from Parliament by President Rawlings

The late Jerry John Rawlings

The government will introduce the electronic tax

This is a 1.75% tax on all electronic transactions

The decision received strong public opposition

The government led by Nana Addo Dankwa Akufo-Addo is determined to pass the electronic transaction tax, E-levy, which is to impose a 1.75% tax on all electronic transactions.

Since the announcement of the introduction of the E-levy during the presentation of the 2022 budget by Ken Ofori-Atta, the Minister of Finance, on November 17, 2021, it has received a strong public reaction from some Ghanaians , especially members of the Minority Caucus.

Ofori-Atta during the presentation of the budget indicated that this new directive is part of the strategies aimed at widening the tax net of the country.

He added that the 1.75% tax was also aimed at boosting financial inclusion and protecting vulnerable people in the country.

Ghanaian opposition to the introduction of taxes by the government is not new to the country, especially under the Fourth Republic.

Under the Jerry John Rawlings administration (of blessed memory) between 1993 and 2000, the then President had a largely one-sided NDC Parliament – this was because the NPP had boycotted the 1992 parliamentary elections – and wanted to introduce the new value added tax (VAT).

Ghanaians were not happy with the announcement, there was a series of opposition unrest at the time which led to the ‘kume preko’ protest led by the current president, Nana Addo Dankwa Akufo -Addo, Dr Charles Wereko Brobbey, Dr Nyaho Nyaho Tamakloe, Abdul Malik Kweku Baako, Kwesi Pratt Jnr, Lawyer Akoto Ampaw, Victor Newman, Kwaku Opoku, Napoleon Abdulai and Stanley Agyiri Blankson.

The ‘kume preko’ protest was reportedly one of the largest protests ever held in the country, with around 100,000 participants.

The Rawlings administration, due to various agitations by Ghanaians against VAT, had to withdraw the Bill from Parliament and assured Ghanaians in his sessional address that his government “has no intention of trying to pass a disguised VAT on our people”.

Sharing parts of President Rawlings’ session speech that led to the VAT withdrawal on his Facebook timeline, Samuel Okudzeto Ablakwa, NDC MP, North Tongu, wrote:

“The irony is that the man who led the agitations then and questioned President Rawlings’ democratic credentials is now president and contemptuously refuses to listen to the people – indeed, President Akufo- Addo only said this week that he would make sure the Killer E-Levy went through no matter what.

“Power just amplifies who we really are; history settles accounts.

In the session speech previewed by GhanaWeb, President Rawlings said the reactions to the VAT were a major fact that upset the government’s budget calculations for 1995.

Amid the usual cheers from MPs, Speaker Rawlings said: “There is no doubt that the VAT system offers the simplest, fairest and most efficient way of raising revenue. However, in our case, major weaknesses quickly surfaced in the planning and implementation of the TVA program, particularly in the area of ​​public education.

“The government therefore removed the tax in response to perceived concerns. But we paid a very heavy price for it. Projected revenues have fallen short of expectations, which has limited the government’s ability to absorb the demands of its employees.

President Rawlings continued: “Mr. President, allow me, however, to assure the nation that this government has no intention of trying to pass a disguised VAT on our people. We will ensure that the average Ghanaian has a better understanding of the benefits of the system before we relaunch it.

“And there is no doubt in our minds that as soon as they get it, and the educational effort is supplemented by law enforcement, this tax system will bring us what is needed; what we planned.