If 1% Was Burdensome, What Makes 20% Acceptable?

The ruling government must explain

A tax policy question for every Ghanaian

In 2022, the NDC opposed the Electronic Transfer Levy, describing it as:

• Regressive
• Burdensome
• Economically distortionary
• Harmful to Ghana's digital transformation

Honorable Dr. Cassiel Ato Forson warned that the E-Levy would hurt ordinary Ghanaians. President John Mahama argued that it would discourage electronic transactions. Honorable Haruna Iddrisu questioned its impact on digital investment and private-sector development.

These were economic arguments about taxation, fairness and development.

Today's question

Ghanaians are now being told that the government's digital VAT collection system will enforce an existing effective tax rate of 20% on qualifying foreign digital services. The GRA says this is not a new tax but the economic questions remain.

Six questions the government must answer

1. Cost of living. If a digital service previously cost GH¢100 and now costs GH¢120, has the consumer's cost increased or not?
2. Protection for vulnerable users. If a 1% levy was criticised for burdening citizens, what safeguards protect students, startups and small businesses from higher digital costs?
3. Double taxation. How will government prevent consumers and businesses from being charged twice where foreign providers already collect VAT?
4. Digital entrepreneurship. Has government assessed the impact on innovation, employment, startups and Ghana's digital competitiveness?
5. Political consistency. What has changed in the NDC's position on taxation, financial inclusion and protecting vulnerable citizens?
6. Expenditure discipline. If expenditure rationalisation was the preferred alternative to excessive taxation, what measurable savings have been achieved before intensifying tax collection?

The core issue

A tax may be old in legislation but new in its financial impact on a household. The government cannot answer these questions merely by saying that the tax already exists.

The real test of taxation

1. What does it cost the citizen?
2. How fairly is it administered?
3. What developmental benefits does it produce?

Ghana needs a coherent tax philosophy—not one set of economic principles in opposition and another in government.

The same standard must apply

The same economic principles used to condemn yesterday's tax policies must be applied consistently to today's.

Dr. Edwin Alfred Nii Obodai Provencal Development Economist | Governance & Strategy Analyst