The Government of Ghana has, since May 2022, introduced the electronic transaction levy (e-levy) for all electronic money transfers. Under the current arrangements, any Mobile Money (MoMo) transaction over GH¢100 per day (GH¢3,000 per month) attracts a 1.5% e-levy. This compares to a GH¢20,000 threshold for interbank transfer.
Details of the e-levy can be found here: https://mofep.gov.gh/index.php/about-mof/e-levy-faq. Beyond the reason for introducing the e-levy, it is also argued that anyone who earns over GH¢3,000 per month is not poor, and so should pay the e-levy. This thinking is flawed as it assumes that anyone who earns over GH¢3000 sends or spends GH¢100 per day.
Our current economic structure – where young people or the working class work to feed their aged parents or support relatives – this means that people will have to support relatives each month. Rather than send these dependants GH¢20 per day, one is likely to send GH¢600 so that they are able to manage themselves. The former attracts no e-levy, but the latter does. Yet there has been no money earned, but merely redistributing the already taxed salary.
In another instance, if a family that earns GH¢1,000 per month decide to buy groceries for the month which may cost them GH¢150, rather than pay for food worth GH¢5 per day, they will be taxed for buying in bulk. Yet the former strategy is sensible and encourages families to plan and manage their limited resources, and the latter doesn’t. So, in my opinion, it appears that charging e-levy on monthly transfers over GH¢3,000 makes more sense (compared to the daily GH¢100 threshold).
Secondly, MoMo is highly patronised by the working and middle-class families. For people who are unlikely to have a bank account, or in villages where there are no banks, MoMo is their alternative. So the charging of e-levy on MoMo transactions seems to rather target the poor in communities with no banks. This is unfair! For daily interbank transfers over GH¢20,000 not to attract e-levy confirms the point above.
The rich or those in the cities who can use online bank transfer seem to be given an alternative to avoid e-levy, but the poor and those in villages cannot avoid it. It also appears that the GH¢20,000 threshold allows the rich to avoid paying e-levy. If government considers someone who earns GH¢3,000 per month to be rich and so should pay e-levy, what do you call someone who can pay GH¢20,000 per day? [The argument of trying to protect businesses makes is flawed, because many market women use the MoMo platform to transfer business money].
Finally, one must ask, what is the real value of GH¢100 per day in today’s Ghana? What can you really purchase with GH¢100? Does that sound like a rich person? Under the current arrangements, gifts are taxed, hospital bills are taxed, utility bills are taxed, money for baby food and sanitary pads will all be taxed if they are paid via MoMo. The current MoMo tax strategy is, therefore, discriminatory – targeting the poor – and is unfair. It does not convey the spirit of the letter by taxing the untaxed or raising money from the middle class and rich.
I am not arguing that e-levy should not be passed. Rather I suggest the MoMo tax should be applicable on transactions over a monthly threshold rather than a daily threshold, even if it means lowering the threshold to GH¢2,000 per month rather than GH¢100 per day. This way Bro. Kwaku, the painter, can send GH¢300 to his mum in the village for her monthly upkeep without being taxed – rather than allowing Mr. Mensah to send GH¢10,000 via bank transfer to his son without being taxed. #FixElevy
The writer is a Lecturer in Public Health and Nursing at the University of Dundee, UK.
Disclaimer: All views are entirely those of the author and does not reflect the position of the publishing outlet.