How all Govt’s justifications for the MoMo Tax keep falling one after the other


Mensah Thompson of ASEPA writes…

1. Folks we diffused a series of Government’s justification for this Momo tax last week and just today Government Spokespersons are back with another set of Misleading and Laughable narratives.

2. They Claim that this Momo tax has been introduced to rope in the huge informal sector that are not paying taxes into the tax bracket.

3. This claim is not only laughable and misleading, it also shows a totally lack of understanding of Government’s own Policies and Programs, suffice to say Government itself does not even understand what it is doing.

4. Folks, in-terms of the economy, the sectors are divided into two, the Informal Sector and the Formal sector.

5. According statistics from the GRA, the formal sector bears about 75% of the tax burden of all Ghanaians, it is trite knowledge that the formal sector is seriously overburdened with taxes because the formal sectors are easy targets for Government.
Every month, once you work in the formal sector, 10% of your income is deducted as income tax.
The company or organization you work in also pays 25% of every income they make as Corporate Income Tax.
This is besides all the indirect taxes on fuel, on utility, and several commodities.

6. So if you claim the formal sector is overburdened and now you want to target the informal sector, how then do you introduce a tax that would also affect the Formal Sector who are already overburdened with numerous taxes?

7. Or is Government saying only the informal sector people use Mobile Money or Electronic Transactions?

8. A thorough analysis of Momo records from the Telcos would show that, the Formal sector would likely take more hit from this Momo tax even more than the informal economy because a lot of the formal economy have integrated these online payments as part of their payment routines.
What this means is that these businesses and individuals are going to be liable for both Corporate Income tax and e-transaction tax.

10. Now come to think of it, did you know that currently there is taxes already on Momo?

11. Yes you heard right, when you send money, the telcos charge you 1%, out of this 1%, they pay 25% which is 0.25% to Government as Corporate Income tax(CIT).
What this means is that if you send 100cedis and the telcos charge you 1cedi, not all the 1cedi belongs to the telcos.
The telcos retain only 75Pesewas and pay 25Pesewas (0.25%) to Government as CIT.

12. Now Government is passing behind the telcos to introduce another tax, which is a direct tax of 1.75% on all Momo transactions.
What this means is that for every Momo you send, your charges would be 2.75% which is the [1%charges +1.75%tax=2.75%]

13. Out of this 2.75% only 0.75% goes to the telcos, the remaining 2% would go to Government.
So for every Momo transaction you make Government is taxing you a whopping 2% ad valorem of the transaction amount.
No this is dangerous for business, especially young budding businesses and traders whose profit margins are very small.

14. What Government could have done instead of this 1.75% direct tax was to negotiate with the Telcos and increase the Corporate Income Tax on the Revenue they make from Momo charges from 25% to say 50%.

15. What this would have meant is that the telcos would then pass on the additional 0.25% increase to us the consumers and so if you send a Momo of say 100cedis, instead of 1cedi as charges, you pay 1.25p.
Then the telcos would deduct their 75p and pay the remaining 50p to Government as CIT which would have had less impact on consumers rather sidestepping the telcos to introduce a direct ad valorem tax on all e-transactions.

16. Like we have said, it is now obvious that not so much thinking went into this decision and so what we are asking Government to do is to go and come back again.
The Finance Minister and Government must be guided by the Akan adage that says “If you cut your tongue and chew it, then you haven’t chewed any meat”

The fight continues unabated!!!

Mensah Thompson
Executive Director, ASEPA

Filasco News

Filasco DeGeneral: Broadcast journalist: #0245405110# for your publications. GOD is my helper💯

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