The E-Levy Is Gone. The Fear It Created Is Not.

By Joseph Benedict Mensah MBA Student, Accounting and Taxation, GIMPA

Economist Rev. Dr Samuel Worlanyo Mensah has called on the government to “re-engineer” and reintroduce the Electronic Transfer Levy (E-Levy), the mobile money tax Parliament abolished in 2025. The government said its abolition would return about GH¢2 billion to Ghanaians through the removal of the tax. His case is not unreasonable: the “Big Push” infrastructure programme and the proposed 24-hour economy need financing, borrowing carries its own costs, and mobile money remains an administratively convenient tax handle in an economy that is still overwhelmingly informal.

The fiscal backdrop is real. Debt restructuring is still working through the system, inflation has only recently settled into single digits, and government has simultaneously unwound levies like the COVID-19 Health Recovery Levy to simplify a bloated tax code. Something must fill the gap.

A tax too small to explain the anger

At its final rate, the levy took 1 percent of transfers above a modest threshold. That was real money for a trader, even if the rate appeared modest. Yet it generated sustained public and political opposition and eventually became an election issue, with its repeal among the commitments of the NDC.

A survey of 2,700 informal workers in Accra, conducted by researchers affiliated with the Institute of Development Studies, found the levy sharply regressive: the lowest earners paid the largest share of income towards it, and home-based workers were often harder hit than street vendors. The research also points to the importance of trust in shaping attitudes towards taxation. I would argue that the E-Levy added another concern: a sense among some users that previously less-visible economic activity had become easier for the state to observe. A tax resented for its cost is a design problem. If taxpayers also fear how their financial information may be used, that becomes a trust problem, and trust problems are not solved simply by adjusting the rate.

What traders actually feared

For many informal traders, cash transactions traditionally left a limited digital trail. Mobile money changed that by routing transactions through electronic systems years before the E-Levy existed. The levy then made taxation of those digital transfers highly visible through transaction-by-transaction deductions. One overlooked question is whether this visibility contributed to concerns about how easily informal economic activity could be observed and taxed.

Tax-compliance research suggests that compliance is shaped by both trust in tax authorities and the state’s capacity to monitor taxable activity. Research on “third-party reporting” also shows that tax compliance can increase when income or transactions are independently reported. Mobile money therefore raises an important policy question for Ghana: how should greater financial visibility be matched with public confidence about how data are accessed, protected and used?

Repeal removed the charge, not the plumbing

Transactions still run through digital payment systems, while the GRA continues efforts to improve tax administration and bring more economic activity into the tax net. Repeal removed the visible transaction-by-transaction E-Levy charge, but it did not reverse Ghana’s wider shift towards digital payments and digital tax administration. Whether the experience has had a lasting effect on how informal operators view mobile money and taxation remains an important question for further research.

The same experiment, four times

Uganda, Kenya and Tanzania have all experimented with taxes on mobile money or digital transactions, with governments adjusting some of these measures after public criticism or concerns about their effects. The recurring lesson is that administrative convenience alone is not enough. Governments must also consider affordability, financial inclusion, taxpayer communication and public trust when designing taxes on digital transactions.

What an honest relaunch requires

Rev. Dr Mensah’s proposal to earmark the revenue addresses an important concern, but earmarking alone may not be enough to rebuild public confidence. Any serious proposal to reintroduce the levy should include a plain-language account of what data telecoms share and why; transparent and independently verifiable reporting on how the revenue is used; consultation with informal-sector groups before legislation; and clear communication about the safeguards governing taxpayers’ financial data.

The debate over the E-Levy should therefore go beyond whether 1 percent was too high or whether a different threshold would raise more revenue. One overlooked explanation for the resistance is the relationship between taxation, financial visibility and trust. If Ghana ever revisits the levy, those concerns should be addressed from the start rather than after public resistance emerges.