MoMo transactions fall by GHS 10bn over impending E-levy implementation
Total value of mobile money transactions over a three months period – November 2021 to December 2022 – has declined by GHS 10bn.
This is per data made available by the Central Bank in its Summary of Economic and Financial Data published in March 2022.
The platform, which is the largest payment system network in the country, saw its transaction value decline to GHS 76.2 billion in January 2022 from the GHS 86.1billion recorded in November 2021, indicating a drop of GHS 9.9 billion.
Besides the drop in value on the platform, the total number of transactions also declined as it saw a 24 million drop in January 2022 from November 2021.
The number of active agents also saw a decline of 7,000 within the same period, while active mobile money accounts also decreased by 600,000 in the review period.
All these declines experienced since November 2021 when the E-levy was announced by the Finance Minister Ken Ofori-Atta points to the conclusion that users of the mobile money platform are not ready to pay the proposed tax and are resorting to cash options.
Speaking in an interview, Senior lecturer at the University of Ghana Business School, Dr. Vera Fiador, agrees with the fact that an expected GHS 7 billion revenue targeted from the E-levy will not be achieved given the reluctance to use the mobile money platform by users even before implementation of the tax from May 1, 2022.
She reiterated concerns that the poor will bear the heaviest burden of the new tax, considering the mobile money platform is their only option when it comes to financial transactions.
However, President Akufo-Addo thinks otherwise as he says the E-levy is a tax on the mobile money industry and not a tax on the poor.
The President speaking in an interview on BBC Africa, attributed the passage of the controversial electronic transaction bill to the country’s low tax-to-GDP ratio.
According to the President, Ghana compared to its West African peers has the lowest tax-to-GDP ratio of about 13% which is below the region’s known tax-to-GDP ratio of 18%.
The President averred the digital economy is the biggest emerging economy in the country which has not been taxed for several years now.
To him, taxing the digital economy and particularly mobile money transactions through the E-Levy bill, is bringing the digital economy under the net of taxation for national development.
“The digital economy, mobile economy is emerging as the biggest economy in the country and for a long period it has not had any taxation at all, so its important now that it also come into the net (taxation).
“Our country has the lowest tax to GDP ratios of any country in West Africa, the ECOWAS area tax to GDP average is about 18%, Ghana we are at 13%, if anything at all we are undertaxed.
“They [Ghanaians] are not already impoverished (poor), we are talking about taxing an industry where a lot of value is being created and we also want to bring the value to government coffers.
“Ghana is not the only country that has E-Levy, many countries have it, people never like taxes, I don’t know of any group of people especially businesses that when taxes are brought to them they are happy,” he argued.
President Akufo-Addo on March 31, 2022, signed the E-levy Bill into law.
As a result, the Bill, which was passed by Parliament on Tuesday, March 29, 2022, has now become a binding law which will be operationalised as a revenue measure across the country.
