Users may resort to other modes of money transfer because of e-levy
Economists Prof Charles Godfred Ackah and Dr Kwadwo Opoku have opined that the government’s intention to use the electronic transaction levy (e-levy) to boost Ghana’s revenue in 2022 may not be achievable. Instead, they believe this will erode the digital inclusion agenda since people may instead resort to other substitutes.
“The opportunity to avoid using MoMo for transaction settlement will also affect the projected revenues for 2022. Though FTTs appear to offer an easy fiscal handle, their revenues have a tendency to erode over time as taxpayers learn to avoid them by using cash payments and other payment methods. A back of envelope calculation suggests that the E-Levy will likely generate far less revenue than the projected.”
According to them, MTN MoMo recorded a total volume of transactions of 2.6 billion, amounting to GH₵549 billion (the total value of Mobile money transactions for all service providers was GH₵564 billion) in 2020.
“The total revenue generated by the MTN end-to-end charges of 2 per cent amounted to GH₵1.3 billion (equivalent to 0.23 per cent of the total value of transactions or GH₵0.5 per transaction)."
“Supposing the value of MoMo transactions experience an annual growth of 100 per cent to reach GH₵2.3 trillion in 2022, using the MTN average effective charge of 0.23 per cent in 2020, the 1.75 per cent E-Levy on MoMo transactions will generate revenues of GH₵4.5 billion (GH₵2.4 billion less than the projected GH₵6.9 billion in the 2022 Budget Statement)."
Associate Professor of Economics at the Institute of Statistical, Social and Economic Research (ISSER), Professor Charles Godfred Ackah and Economist and Research Fellow at the Centre for Social Policy Studies (CSPS), Dr Kwadwo Opoku made these assertions in an opinion article.
Per this analysis, they have projected some behavioural changes among service users, adding that “the projected revenue in the budget is over-optimistic.”
They cite the case of Uganda, where the country experienced a marginal reduction in mobile money transactions after the imposition of a 1% tax.
“In Uganda, for example, the imposition of one per cent mobile money transaction (cash-in, transfer and cash-out) tax led to a drastic reduction in mobile money transactions—the value of mobile money transactions fell by 24 per cent. The IMF had warned that it was the rural poor who were likely to be hit disproportionally hard by the transaction taxes. In fact, transaction values of P2P transfers fell by more than 50 per cent.”
Parliament of Ghana