2023 budget: E-levy reduced from 1.5 percent to 1 percent

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Over 40% of MoMo transactions are below GH¢100

Government has reduced the headline rate of the controversial e-levy from 1.5 percent to one percent of the transaction value, finance Minister, Ken Ofori-Atta has announced.

Presenting the 2023 budget statement, the minister further announced the removal of the daily threshold.

Ghana’s introduction of a 1.5% tax on mobile money transactions in May 2022 has been watched closely by policymakers across Africa. The proponents of the electronic transaction levy (E-levy) argue that taxes on mobile money – commonly referred to in Ghana as MoMo – present an opportunity for cash-strapped governments to raise funds in the complex post-pandemic context.

In Ghana, the ‘E-levy’ has been linked to the current administration’s ‘Ghana Beyond Aid’ strategy for reducing aid-dependence.

Taxes on MoMo in Ghana and elsewhere have also been justified as a way to “capture” those working in the informal economy, who are perceived as being untaxed. Critics have pointed out, however, that informal workers (who make up 89% of total employment in Ghana) already pay a range of fees and taxes. Therefore, they may be disproportionately affected by this new tax.

 

More soon.

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