Elasticity of Substitution – Louth Online http://louthonline.com/ Fri, 07 Jan 2022 21:13:43 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 http://louthonline.com/wp-content/uploads/2021/03/louthonline-icon-70x70.png Elasticity of Substitution – Louth Online http://louthonline.com/ 32 32 Retail investors look to gold and silver for best results in 2022, Wall Street points to silver and platinum http://louthonline.com/retail-investors-look-to-gold-and-silver-for-best-results-in-2022-wall-street-points-to-silver-and-platinum/ Fri, 07 Jan 2022 19:09:00 +0000 http://louthonline.com/retail-investors-look-to-gold-and-silver-for-best-results-in-2022-wall-street-points-to-silver-and-platinum/

Welcome to Kitco News’ Perspectives 2022 series. The new year will be filled with uncertainties as the Federal Reserve seeks to pivot and tighten monetary policies. At the same time, the inflationary threat continues to grow, meaning that real rates will stay in low to negative territory. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2022.

(Kitco News) After a disappointing year for gold and silver, Main Street expects the bearish tide to reverse in 2022, picking both metals as top performers in the new year, poll shows online from Kitco.

Gold ended the year down 3.6%, posting its biggest annual decline since 2015. Silver closed 2021 with a drop of 11.5%, which was the metal’s biggest drop since 2014 .

Both metals failed to gain traction over the past year despite the hot inflation rhetoric as a strong economic recovery and more aggressive outlook from the Federal Reserve weighed on prices.

Retail investors are hoping the downtrend has peaked, with Kitco’s survey results showing participants almost evenly split between gold and silver as the top two picks for top performers in 2022.

Out of 1,569 respondents, 32.7% chose gold as the best performer for 2022, while 32.1% chose silver. The third most popular metal for next year was copper, with 12.9% of respondents betting on the red metal. 9.2% chose lithium and 6.7% chose Bitcoin. Platinum only garnered 4.5% support, followed by palladium at 2%.

The Wall Street side is also bullish on gold and silver over the long term. Analysts told Kitco gold is well positioned to rebound with interest rate hikes, while silver has a chance to catch up after lagging behind gold for months.

“After facing many headwinds in 2021, we believe the upward path for gold looks clearer in 2022. Moderating stock market returns and concerns about inflation could pull the market back. the center of attention and return to the yellow metal next year. [The] The greenback won’t be a substantial headwind in 2022 like it was in 2021, ”Wells Fargo said in its outlook. “While we are optimistic that gold may finally rise in 2022, a stronger price trend may take some time to develop, prompting us to lower our end-of-year 2022 target range to $ 2,000 – $ 100. “

BofA also highlighted the rise in gold in 2022 while highlighting the positive outlook for silver and platinum. “As gold markets refocus from tighter monetary policy on how rates can rise, the gold should rally; we think 10-year Treasuries above 2.5% are difficult to maintain. The increased investment in solar panels is expected to boost the cash. Platinum is the rebound trade on the normalization of chip shortages in the automotive industry; substituting palladium should also help, ”the bank said.

Bloomberg Intelligence sees gold outperforming other metals in 2022, citing enduring trends favoring the precious metal.

“A main question for 2022 could be to know what is preventing gold from regaining the upper hand over most commodities, and our bias is to favor lasting trends (especially since the financial crisis), which favor precious metals more than industry and the metals sector relative to broad commodities, ”said Mike McGlone, senior commodities strategist at Bloomberg Intelligence. “As of late 2007, the roughly 115% gain in gold has been based on an unlimited supply of fiat money. Greater supply elasticity is a headwind for copper. Indicating the difference for investors, the Bloomberg Copper Subindex Total Return is around 20% versus 40% for the place. “

After largely ignoring the problematic inflation narrative for most of 2021, markets are increasingly concerned about mounting price pressures, Gareth Soloway, chief market strategist at InTheMoneyStocks.com told Kitco News. .

“What I’m optimistic about is gold. It will be the best performer here in 2022. You should see a rise to the highs from 2020. There is even potential for a price target of 3,000. $ on gold. You have to look at the inflation numbers. I don’t think inflation will go back to 2%. The Fed will go down, but eventually people will turn to gold, “Soloway said.

And if gold does well in the new year, silver has a chance to outperform the yellow metal, analysts said.

“There’s definitely this catch-up story built into there. It has underperformed gold to date. And you will find that investors will look to the silver market as a result,” said Daniel Hynes, senior raw materials strategist at ANZ.

The gold-to-silver ratio also indicates silver’s outperformance, noted Jordan Eliseo, manager of listed products and investment research at Perth Mint.

“The very fact that the gold-to-silver ratio is around 80: 1, that alone suggests that if gold is going to rise, silver at the very least is going to come in and could very possibly surpass gold,” Eliseo mentioned. . Money also benefits if commodities as a whole are doing well. If economies are performing relatively well, it should benefit from an industrial perspective and the whole ESG transition that is taking place in the economy. “

Silver has the best chance of increasing in 2022, said Everett Millman, precious metals expert at Gainesville Coins. “It’s so cheap compared to other metals and other raw materials. And it features prominently in emerging technologies and green energy. It’s a perfect storm for the money to burst. well in 2022, especially after it’s really lagging behind gold in recent years, ”says Millman.

Analysts have also pointed to the upside potential for platinum in 2022 due to its supply-demand fundamentals.

“Platinum doesn’t have all the conspiracy and short sellers that silver has. The market is smaller. There aren’t many players involved. You have supply issues, but they are. being solved. You will see the demand for platinum return. When the supply chain issues are resolved, you should see that platinum is the one that outperforms the rest. It is one of the underdogs of the last year, ”Phillip Streible, chief market strategist for Blue Line Futures, told Kitco News.

Warning: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.

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B2B pricing strategy in a tight economy http://louthonline.com/b2b-pricing-strategy-in-a-tight-economy/ Thu, 23 Dec 2021 15:06:10 +0000 http://louthonline.com/b2b-pricing-strategy-in-a-tight-economy/


NEW! Listen to the article

The business economy has taken a severe hit in recent times. When a huge ship named Ever Given ran aground in the Suez Canal in Egypt, it had repercussions around the world. And as we try to come out of the pandemic, other serious supply chain issues have arisen.

In the face of such volatility and unpredictability in the economy, corporate profits are reduced. But what can B2B companies do about it?

When profitability suffers, the priority is to reduce the costs of the business. The Lean Process Improvement model of ensuring that all tasks and workflows are efficient and effective can have lasting positive effects on bottom lines.

Businesses may also consider outsourcing functions such as IT, payroll, and even manufacturing. Your organization may never have imagined that other raw material suppliers, contractors and temporary workers are able to bring instant skills to the workplace for less.

But cost reductions can only take your business to a point. To maintain profitability, companies must also take pricing action.

There are different approaches to increasing prices, but increases should always be implemented with care and in a competitive manner.

Four ways to strategically increase prices

Every pricing initiative should begin with an understanding of the business growth drivers and important sources of volume. Making changes that compromise them is bad business.

It is also necessary to monitor market participants well, as competition and differential value set the limits on pricing. Improving the differential value of offers allows Easier so that customers pay more.

At the heart of business strategy is segmentation, based on a solid understanding of customer performance needs, the buying process and criteria. Do they want to buy directly or through a distributor, and where are there price sensitivities?

Having this information makes it easy to identify the least profitable SKUs and sell them through alternative channels such as e-commerce. Then you can be more aggressive with pricing in segments where there are no clear substitutes.

Additionally, value propositions need to be refined for each target segment. Are the company’s offerings helping customers reduce costs or increase revenue? Find your unique selling point and amplify it.

Beyond the outline of business strategy, let’s talk about specific ways you can increase prices without sending your customers packing.

1. Get creative with pricing models

Think unique: Products, services, and parts can be categorized based on their uniqueness to your customer.

  • Mark custom products and parts, while keeping items such as nuts, bolts, and pipes at a lower price to avoid substitution.
  • Create “Good”, “Better” and “Best” products for entry-level, target-level and presentation products; it allows pricing flexibility.
  • Provide low-cost offers with higher margins, such as own-brand items or insourced entry-level products, which have a place in the product line.

Think about the grouping: Items that are typically purchased together can be grouped together into an assembly or scatter which speeds up further processing.

  • Parts used for routine maintenance, including consumables, lend themselves well to grouping. Imagine the convenience of a gasket replacement kit that saves time and trips to the hardware store.
  • The price of the lots may be slightly less than the sum of the parts, or more if there are efficiencies.

Think about the timing:

  • If an offer is late in its lifecycle and sales are declining, customers can be migrated to SKUs with better margins.
  • Take advantage of price elasticity when switching costs are high or when there is a high degree of customization.

2. Adjust the definition of your product

There are several tactics to redefine your product that may work depending on the industry you are in.

  • Add a valuable service component, such as a facility or vendor-managed inventory to a physical product.
  • Mark and produce delivery or maintenance contracts for better price differentiation.
  • Make simple changes to product packaging, including color coding on boxes or offering quantities of liquids in bags, to provide price adjustment possibilities.
  • Change the pricing structure with a different unit of measure, for example, billing by activity such as hours flown, gallons pumped, or number of students trained.
  • Consider when renting versus outright buying makes sense: industrial customers often prefer to rent versus buy, while government customers may have easier access to capital budgets; Subscription models are popular in software and can also be used for consumables or rental equipment, and the addition of automatic renewals makes the relationship even stickier.
  • Use fixed and variable price variants with the same product: Some customers will prefer a monthly plan with a variable usage fee to a higher plan with a capped variable.

3. Be competitive on value

Many companies are reluctant to communicate about quality and value, but it’s worth being explicit about a product’s price position in the market. Don’t let prospects guess; if you have a unique or premium product, saying so will help you justify a higher price.

Investigate customer operations in detail and determine what end benefit your product contributes to. Then price it accordingly while being highly collaborative around innovation and product development. You can even stimulate new demand with a product and price comparison tool on your website.

4. Play the terms of service to your advantage

It may seem trivial, but some companies reap huge benefits by changing the terms of use of their various products and customers.

  • Change the pricing context by marking freight and urgent orders, or apply a surcharge for small orders.
  • Engage new customers with basic service, then offer a self-service upsell for more features.
  • Change the thresholds and target levels for volume discounts and discounts to improve margins.
  • Enforce surtax rules in contracts for fuel, shipping charges, or impact on commodity prices.
  • Optimize the price for high usage / high utility SKUs.

Even if price increases seem risky, your business can claim a significant share of the portfolio by carefully examining your industry, product, and how best to play price to your advantage.

How to implement B2B price increases wisely

Even if you think you have found the magic pricing strategy for your business, it is recommended that you create a cross-functional pricing team that includes sales, marketing, finance, and operations before implementing any increases.

Take a calculated approach to adjustments, re-examining prices line by line, keeping these elements in mind:

  • SKUs that haven’t seen increases recently may be priced too low; therefore, there will be less resistance to increases.
  • Always provide product and service options to retain price-sensitive customers. The cheaper and simpler “good” versions work well to retain customers, as do the low cost offers available in limited quantities.

When communicating price increases, explain your decision. Please feel free to mention how long ago the prices have been adjusted, or to point out how much the customer has increased their own selling prices.

It’s also a good idea to report pending price increases directly to important customers. The announcement of upcoming price movements in the trade press is not collusion, and it gives competitors a chance to follow suit, thus increasing the profitability of the industry at all levels.

Tying it all together

It is difficult to hold up a conventional price increase without doing proper market research and carefully considering the pricing strategy. Effective pricing begins with market segmentation, based on customer needs. If the issues are understood, an offering that meets the needs of the segment can be designed and priced according to the value it brings.

Adding service components or innovative pricing models such as subscriptions or activity-based pricing can add differentiation. No matter how a business comes up with a price, it is important to communicate the value of each product and service.

More resources on the B2B pricing strategy

Seven tips for optimally organizing your pricing page for conversions

Agency price trends for paid search services

13 Psychological Pricing Hacks To Increase Sales [Infographic]

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Electric Vehicle Adhesives Markets: Power Train, Exterior, Interior, Resin Type, Substrate, Liquid, Film & Tape – Global Forecast to 2026 – ResearchAndMarkets.com http://louthonline.com/electric-vehicle-adhesives-markets-power-train-exterior-interior-resin-type-substrate-liquid-film-tape-global-forecast-to-2026-researchandmarkets-com/ Mon, 20 Dec 2021 14:56:00 +0000 http://louthonline.com/electric-vehicle-adhesives-markets-power-train-exterior-interior-resin-type-substrate-liquid-film-tape-global-forecast-to-2026-researchandmarkets-com/

DUBLIN – (COMMERCIAL THREAD) – The “Global Electric Vehicle Adhesives Market By Application (Powertrain, Exterior, Interior), Resin Type, Substrate, Shape (Liquid, Film & Tape), Vehicle Type (Electric Car, Electric Bus, Electric Bicycle) , electric truck), and Region – Forecast to 2026 “has been added to ResearchAndMarkets.com offer.

The global electric vehicle adhesives market size is estimated to be USD 0.4 billion in 2021 and is projected to reach USD 1.8 billion by 2026, at a CAGR of 44.7% between 2021 and 2026.

An adhesive is a chemical substance used to join materials (substrates), the same or different, by their surfaces. EV adhesives are used in a variety of applications such as white body, paint shop, powertrain and assembly. In this report, the market has been defined as the adhesives used in electric vehicles (EVs). The types of electric vehicles considered are the electric car, the electric bus, the electric bicycle (2 wheels) and the electric truck. Polymer, composite and metal have been considered the primary substrates on which EV adhesives are used.

The application of EV adhesives is increasing due to various requirements from automotive manufacturers, such as bonding of similar and dissimilar materials, substitution of traditional substrate materials with synthetic substrates, and increasing attention to environmental concerns. EV adhesives address various engineering and design issues because they have the ability to resist vibration, are lightweight, and allow stress distribution over a wide area.

Exterior application is expected to be the largest application segment in the electric vehicle adhesives market

The increasing production and sale of electric cars has increased the demand for batteries, electric motors, doors, instrument cluster, infotainment system, seats, various panels and charging outlets. Batteries are the most important components in electric cars because they provide power to the car.

The car battery is heavier than other parts. In order to counter the weight of the batteries and reduce the overall weight of electric cars, lightweight materials are used in electric car applications. In the electric vehicle industry, adhesives are used in place of welds, screws, rivets, gaskets and fasteners, which allows automakers to lighten the vehicle. Autonomy is one of the concerns of electric vehicles. Automakers tackle this problem by increasing the capacity of the vehicle’s battery.

The design of electric vehicles should be lightweight to counter the weight of the battery system used in electric vehicles. Bonding dissimilar materials is done using structural adhesives to replace fasteners, rivets and spot welding, which helps reduce vehicle weight. The use of structural adhesives also addresses the issue of impact resistance and safety of battery systems in electric vehicles. With the continuous development of technology, the consumption of adhesives in exterior parts of electric vehicles will further increase during the forecast period.

Polyurethane Expected to be the Largest Resin Type Segment in the Electric Vehicle Adhesives Market

The use of adhesives in electric vehicles is expected to increase during the forecast period. The various applications of adhesives in electric vehicles require different types of adhesives derived from resins such as epoxy, polyurethane, silicone and acrylic. Adhesives made from different resins have different properties and are chosen according to the specific application.

Polyurethane adhesives are made from urethane polymers. They exhibit extraordinary elasticity and elongation up to 600% before breaking. There are three types of polyurethane adhesives, two-component polyurethane adhesives, one-component rigid polyurethane adhesives, and two-component elastic polyurethane adhesives. Bonds of polyurethane adhesives form in two stages: first, the adhesive cools to achieve hold-down strength, and second, the adhesive uses moisture to continue curing for hours or even days to achieve structural strength. final.

Electric cars to be the largest vehicle type segment in the electric vehicle adhesives market

The demand for electric vehicles is growing at a rapid rate due to growing environmental concerns, even as the sale of ICE vehicles is on the decline. The implementation of pro-electric vehicle policies and technological advancements in the value chain will drive the electric vehicle market over the next five years. Growth of electric cars and buses is expected to drive the growth of electric vehicle adhesives during the forecast period.

Automakers have announced increasingly ambitious electrification plans. Of the world’s 20 largest automakers, which accounted for around 90% of new car registrations in 2020, 18 have announced plans to expand their model portfolio and rapidly increase production of light electric vehicles.

The growth of electric cars is being driven by critical policy changes adopted by major countries in electric mobility. These countries have introduced stricter emissions standards in addition to incentives for electric cars and are encouraging investments in the electric vehicle industry value chain to bring price parity between electric vehicles and electric vehicles. In an electric vehicle, adhesive technology plays an essential role in the lightness of the electric vehicle, as it is used in a number of applications. Growing electric vehicle markets such as Europe, APAC and North America will provide growth opportunities for manufacturers of electric vehicle adhesives during the forecast period.

APAC accounts for largest EV adhesives market share by region

APAC accounted for the largest share of the electric vehicle adhesives market in 2020, followed by Europe and North America. Growing tensions in the US-China trade war and low labor costs in China have forced various adhesive end users to relocate and establish their manufacturing base in countries across the country. ASEAN.

This relocation is expected to increase the demand for adhesives in ASEAN countries. India offers low cost labor, which can provide significant investment opportunities for businesses. Government initiatives such as “Make in India” and the proposed government entrepreneurship development program may open up additional opportunities in the industrial construction and infrastructure segments. All of these factors are expected to drive the APAC market.

The main players in this market are Henkel (Germany), HB Fuller (United States), Sika AG (Switzerland), 3M (United States), Wacker Chemie AG (Germany), Bostik SA – An Arkema Company (France), L&L Products (United States), Jowat SE (Germany), Ashland (United States), PPG Industries (United States) and Permabond (United Kingdom).

Premium previews

  • Growing Demand for Lightweight Materials in EV Industry Boosts EV Adhesives Market

  • China accounted for the largest market share

  • Polyurethane segment to register the highest CAGR

  • Electric Car Segment to Record Highest CAGR

  • China will be the fastest growing market

Company Profiles

  • 3M Company

  • Ashland

  • Avery dennison

  • Bostik SA (Arkema Company)

  • Delo Industrie Klebstoffe GmbH & Co. KGaA

  • Dymax Company

  • Evonik Industries AG

  • HB Fuller Company

  • Henkel AG & Co. KGaA

  • Illinois Tool Works Inc.

  • Jowat Se

  • L&L Products

  • Lord Corporation

  • Metlok Private Limited.

  • Permabond SARL.

  • PPG Industries

  • Ried BV

  • Sika AG

  • Threebond Co., Ltd.

  • Uniseal, Inc.

  • Wacker Chemie AG

  • Weicon GmbH & Co. Kg

For more information on this report visit https://www.researchandmarkets.com/r/kxf1z4

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New StrategyR Study Highlights $ 27.3 Billion Global Market for Electric Vehicle Polymers by 2026 http://louthonline.com/new-strategyr-study-highlights-27-3-billion-global-market-for-electric-vehicle-polymers-by-2026/ Wed, 08 Dec 2021 16:00:00 +0000 http://louthonline.com/new-strategyr-study-highlights-27-3-billion-global-market-for-electric-vehicle-polymers-by-2026/

Editing: 4; Posted: November 2021
Executive pool: 613
Companies: 48 – Players covered include AGC Chemicals; Arkema; Arlanxeo; Asahi Kasei; BASF SE; Celanese; Petrochemical Group of China (Sinopec Group); Covestro; Daikin Industries; DowDuPont; DSM engineering plastics; Elkem; Evonik Industries; JSR Company; LANXESS; LG Chem; Lyondellbasell Industries; Mitsubishi Engineering-Plastics Corporation; SABIC; Solvay; Sumitomo Chemicals; The Goodyear Tire & Rubber Company et al.
Blanket: All major geographies and key segments
Segments: Type (engineering plastics, elastomers); Component (interior, exterior, transmission system)
Geographies: World; United States; Canada; Japan; China; Europe (France; Germany; Italy; UK; and rest of Europe); Asia Pacific; Rest of the world.

Free project preview – This is an ongoing global program. Preview our research program before making a purchase decision. We offer free access to qualified executives in charge of strategy, business development, sales and marketing, and product management roles at selected companies. Insights provide privileged access to business trends; competing brands; profiles of experts in the field; and market data models and more. You can also create your own bespoke report using our MarketGlass ™ platform which offers thousands of bytes of data with no obligation to purchase our report. Registry overview


Global Electric Vehicle Polymers Market To Reach US $ 27.3 billion by 2026
Electric vehicle (EV) manufacturing uses lightweight materials that can replace metal parts to reduce vehicle weight. Polymers are used in the manufacture of several exterior and interior parts of vehicles such as panel, dashboard, bumper, trim, wheelhouse, powertrain, other components under the hood, components roof and door components, among others. The increased production of battery-powered electric vehicles or BEVs is propelling the advancement of high performance polymers with improved properties to meet the demands of electric propulsion. BEV sales are expected to increase steadily as BEV technology grows simultaneously with energy density and battery capacity as vehicles become more autonomous and connected. The consumption of polymers in the automotive sector is expected to increase steadily and growth rates are expected to be based on the applications and types of plastics used in automobiles, recycling efforts from various regions, and substitution of interpolymers. The growth rate of plastics such as PA, PP, PE and PC is expected to increase with the introduction of electric vehicles, while the consumption of engineering plastics is expected to decrease.

In the midst of the COVID-19 crisis, the global market for polymers for electric vehicles is estimated at 3.9 billion US dollars in 2020, is expected to reach a revised size of US $ 27.3 billion by 2026, with a CAGR of 38.7% during the analysis period. Engineering Plastics, one of the segments analyzed in the report, is expected to grow at a CAGR of 40.9% to reach US $ 23.8 billion at the end of the analysis period. After a thorough analysis of the business implications of the pandemic and the induced economic crisis, the growth of the elastomers segment is readjusted to a revised CAGR of 35.5% for the next 7 year period. This segment currently represents a 44% share of the global market for polymers for electric vehicles. Engineering plastics provide better physical and mechanical stability, durability and dimensional stability, while giving electric vehicles an aesthetic appearance. Elastomers are generated by combining polymers using chemical bonds to achieve the crosslinking structure and provide high elongation and elasticity against breaking and cracking. Elastomers are used as sealants and rubbers in electric vehicles for the manufacture of tires, and the majority of the demand for elastomers is in tire manufacturing and car insulation.

The US market is estimated at $ 850.1 million in 2021, when China is expected to reach $ 8.3 billion by 2026
The market for polymers for electric vehicles in the United States is estimated at 850.1 million US dollars in 2021. The country currently represents a 17.3% share of the world market. China, the world’s second-largest economy, is expected to reach an estimated market size of 8.3 billion US dollars during the year 2026, with a CAGR of 43.4% throughout the analysis period. Other notable geographic markets include Japan and Canada, each projects growth of 32.4% and 36.5% respectively during the analysis period. In Europe, Germany is expected to grow by around 34.6% CAGR while the rest of the European market (as defined in the study) will reach 3.1 billion US dollars at the end of the analysis period. Asia Pacific dominates the market, due to growing concerns about the environment, increasing government initiatives to encourage green transportation, and ambitious business expansion strategies by electric vehicle manufacturers in China, South Korea, and Japan. Following

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Ghana: discussing the tax on electronic transactions … Our reasoned opinion (2) http://louthonline.com/ghana-discussing-the-tax-on-electronic-transactions-our-reasoned-opinion-2/ Tue, 07 Dec 2021 09:16:36 +0000 http://louthonline.com/ghana-discussing-the-tax-on-electronic-transactions-our-reasoned-opinion-2/

This is the second part of the article published yesterday, the December 6, 2021 issue of the newspaper.

It was later followed by US economist James Tobin, who proposed a financial transaction tax using the famous description that it was to “throw sand in the wheels of excessively efficient international money markets.”

Tobin’s focus was on foreign exchange markets and how to preserve sound macroeconomic policies, hence his suggestion of a currency transaction tax to “throw sand” into the overheated gears of the global financial system and to limit speculation by reducing the speed and volume of transactions. .

Because these taxes are easily administered, FTTs have therefore often been introduced by countries experiencing budget crises as a quick way to generate substantial revenue.

It suffices for a few large financial institutions or, in the case of MoMo, mobile network operators (MNOs), to levy the taxes on their customers and remit them to the tax authorities. However, the introduction of TTFs has always been controversial.

The question is whether there is any justification for efficiency to impose such a tax. Why would anyone want to ‘throw sand’ in the wheels of our budding MoMo payments ecosystem? If this direct debit proposal became law, it would mean that as of February 1, 2022, the government would take 1.75% of the value of each MoMo transfer in excess of GH ¢ 100 per day.

This tax would still apply every time one used their MoMo account to make transfers, whether it was paying your child’s school fees or sending money to pay medical bills. of your parents in the village. The design of the tax raises a number of concerns. The proposed Ghana E-Levy will only affect a segment of financial transactions that involve the transfer of resources from one person (business or individual) to another if it takes place electronically and is connected with MoMo or payment cards. By only taxing electronic financial transactions associated with MoMo and payment cards, E-Levy can be avoided by simply switching to other payment methods.

There are good reasons to reconsider taxation in the financial sector. Since the proposed Ghana E-Levy only targets mobile money transactions, the tax would potentially result in substitution between financial instruments or payment methods and thus generate less tax revenue than projected in the 2022 budget. .

The tax will increase both the explicit and implicit transaction costs for MoMo payments. cash for transactions. These unintended consequences could outweigh any benefits to be derived from the income levy. To illustrate, assuming someone wants to transfer 10,000 GH ¢ to a customer or relative, there is a menu of payment options to choose from:

1) issue a check to the person;

2) deposit money into the person’s bank account;

3) transfer money from a bank account to the person’s bank account through online banking;

4) transfer money from a mobile money account to the person’s bank account;

5) transfer money from a bank account to the person’s mobile money account;

6) transfer money from a mobile money account to the person’s mobile money account.

E-Levy tax liability does not arise if the first three options are used; the last three options, which involve mobile money, are the target and would therefore result in a tax liability of GH ¢ 175. Therefore, the E-Levy discriminates against the use of an electronic medium – mobile money – to settle transactions. So the question is: do we have a problem with the frequent use of mobile money? We guess the answer will be no!

It is evident that the main objective of the E-Levy proposed by Ghana is to generate revenue for the government due to the apparent budgetary challenges. Tax revenues in Ghana are low: less than 13% of GDP compared to an average of 16.4% in sub-Saharan Africa. Indeed, the problem of the budget deficit has everything to do with the weak mobilization of domestic revenue.

Public spending as a percentage of GDP has been relatively stable, at least over the past decade, rising from 23.8% in 2016 to 19.4% in 2019 before rising to 25.1% in 2020 (largely due to expenses related to COVID-19 and the election year). syndrome). So, ideally, we should support any commitment to widen the tax net to increase revenues, reduce the deficit and debt accumulation and for the provision of public services and infrastructure in the country.

However, the proposed E-Levy is not the way to go. It is simply not an effective tax. The proposed electronic direct debit may hamper the functioning of both the Ghanaian financial system and the real economy. For more efficient tax management, the choices of taxpayers are not affected by tax policy.

The E-Levy will affect the medium to be used in the transaction or transfer payment: cash, check and electronic payment or transfer media. This will create inefficiency in the economy since an inefficient means of payment will be used because of the E-Levy. Payments and transfers will shift from electronic or digital platforms to cash or checks to bypass the E-Levy. Thus, the use of cash will increase and distort prices in the economy. The proposed electronic direct debit also has implications in terms of distribution and income generation. Due to its cascading effect, the incidence of FTTs, such as the proposed electronic debit, can be complex and capricious.

Although sometimes presented as progressive, the burden of the tax can end up falling on the poor who have limited financial payment options and on those who depend primarily on inbound remittances.

We know that there are differences in the elasticities of demand for electronic payments between different MoMo users. Transfers or gifts, which are usually urgent or necessary for the recipients, have low elasticity because there are few substitutes given the length of time the recipient has to get the money transferred.

Thus, the incidence will be high for groups providing urgent aid or living far from the people they care for. These are transfers to people who may have critical needs or who live in places far from the person making the transfer.

People who can wire transfers or make large payments (say 1,000 GH ¢) can switch to bank transfers, issue a check, or make direct deposits instead of using mobile money and paying GH ¢ 17.50. So a transfer of GH ¢ 1,000 to pay for goods and services – even a remittance to a parent – will incur a tax of GH ¢ 17.50, but if the same payment / remittance was made by direct deposit or wire transfer to the person’s bank account, no tax obligation would arise.

Essentially, there are options available for large senders to use for payments and transfers. They can easily avoid this tax. Thus, the burden of the E-Levy will fall disproportionately on people who might not be able to transfer substantial resources at once.

The ability to avoid using MoMo for settlement of transactions will also affect projected revenues for 2022. Although FTTs appear to offer easy tax management, their revenues tend to erode over time as the taxpayers learn to avoid them by using cash payments. and other payment methods.