Refrain from plans to cancel E-levy – GRA warns stakeholders

According to the Deputy Minister for Finance, John Kumah, the E-levy raked in GHC 1.19 billion in 2023. The amount surpassed the GHC83.15 million target.

According to the state-owned tax collection agency, digital financial services (DFS) taxes, including the e-levy, are critical to improving Ghana’s tax-to-GDP ratio and broadening the tax net to include the informal sector.

However, Charles Addae, GRA’s Deputy Commissioner, attributed the e-levy’s success to technological developments such as the integration of charging entities into the Electronic Management System (ELMAS) and measures to combat tax evasion.

He spoke at the “Taxing Mobile Money – Lessons and Ways Forward” conference organised by the International Center for Tax and Development in collaboration with the GRA in Accra.

The Deputy Commissioner emphasised the rationale behind maintaining the tax handle. He cautioned against attempts to cancel the E-levy, especially by political actors.

Addae underscored the importance of increasing the tax-to-GDP ratio to facilitate national development, urging collective support from all stakeholders.

“There are talks that the tax would be cancelled in the near future, but we are pleading that it’s better we sustain the current generation value raised to cushion the economy. Otherwise, we would be depending too much on loans.”

“The idea for e-levy is not how to introduce new tax types but to deepen tax revenue generation in a way that does not affect the already existing businesses that are paying taxes. The tax has been very unpopular as the populace are not seeing the tax to be a good source, but with education and better deployment of technology, we are seeing progress,” he said.

However, the Research Director at the International Center for Tax and Development (ICTD), Dr. Martin Hearson, expressed concerns about the e-levy’s regressive nature, as well as informal workers’ lack of faith in the government. While appreciating the cash gained, Hearson called for a review of the levy to address these concerns.

“There were serious concerns about the fact that if you introduce a tax like this, it affects growth in the mobile money market, but the impact that we saw was only modest and temporary and in the long-run, it seems the growth has continued in spite of the tax,” said Hearson.

E-levy was originally implemented in the 2022 Budget Statement and Economic Policy at a rate of 1.75 percent but was later reduced to 1.5 percent.

Despite these changes, the levy collected GH₵1.19 billion in 2023, suggesting increased knowledge and acceptance among Ghanaians.