Ghana’s e-Levy on Mobile Money: An Indication of Taxes in the Future?

Ghana’s finance minister Ken Ofori-Atta has announced that the government intends to introduce an electronic transaction levy (e-levy) in the 2022 budget. He said this was to “widen the tax net and rope in the informal sector”. The proposed levy, which will come into effect on 1 February 2022, is a charge of 1.75% of the value of electronic transactions. It covers mobile money payments, bank transfers, merchant payments, and inward remittances. The originator of the transactions will bear the charge except for inward remittances, which will be borne by the recipient. The justification for this new levy is to widen the tax net since the majority of the population makes a living in the informal sector and it is a convenient means to increase government revenue. There has been a hostile initial response to the announcement of the levy and fears that it will affect the country’s current digitisation agenda. Research into the use of financial technology in Ghana has shown that in the absence of practical alternatives, mobile money is the only means for many people to access financial services and that there is some elasticity when increasing the costs. Hiking up the cost of mobile money will not stifle its use.