Ghana’s decision to tax mobile money transactions sparks outrage

November 18, 2021 Elwin Mandowa

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A decision by the government of Ghana to introduce a levy on electronic transactions has left many citizens infuriated.

In the presentation of the country’s 2022 budget statement, the country’s Finance Minister Ken Ofori Atta announced that the introduction of the e-levy has been necessitated by the astronomical rise in electronic transactions, hitting $80 billion (over 500 billion Cedis) in 2020.

According to him, between February 2020 and February 2021 alone, Ghana saw an increase of over 120% in the value of digital transactions.

The government is now imposing a 1.75 percent levy on all electronic transactions such as mobile money payments, bank transfers, merchant payments and inward remittances.

“Mr. Speaker, it is becoming clear there exists enormous potential to increase tax revenues by bringing into the tax bracket, transactions that could be best defined as being undertaken in the “informal economy.

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After considerable deliberations, Government has decided to place a levy on all electronic transactions to widen the tax net and rope in the informal sector. This shall be known as the “Electronic Transaction Levy or E-Levy,” he said.

#2022GHBudget #AgyenkwaBudget pic.twitter.com/oysPKyxsh1

— Ministry of Information (@moigovgh) November 17, 2021

Although the government plans to use some of the proceeds to promote entrepreneurship and create jobs for the youth, many Ghanaians have taken to social media to kick against it.

😂 the momo tax make people vex oo. Ei

Please. You’ll pay!!

— Ole’s Ex (@thenanaaba) November 17, 2021

Paraphrasing Asiedu Nketsiah-

You don’t abolish road tolls for persons who can pay and tax momo users especially rural folks. It’s a regressive move #NewsNight

— Vandem (@Bridget_Otoo) November 17, 2021

Already, we’re crying over the hardships in 🇬🇭 and you want to levy momo transactions. This budget cannot be called Agyenkwa. The real Agyenkwa (Jesus) didn’t impose suffering on us, rather He took them away and set us free. #JoySMS

— Eric A.Frimpong (@ekfrimpong) November 18, 2021

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The MoMo tax is insane. It’s really going to affect businesses and ordinary Ghanaians. Imagine a trader in Kumasi paying Gh1,750 on Ghc100,000 to a supplier in Accra. This means that it’s even cheaper to travel from Kumasi to Accra and back by flight to pay your supplier.

— Keks⚡️ (@k_ekeli) November 17, 2021

Opposition lawmakers to reject the move

Meanwhile opposition lawmakers in Ghana have criticized the government for overburdening Ghanaians with more taxes amid current economic hardship.

They lawmakers intend rejecting the e-levy when voting to approval of the budget takes place.

Let’s break down the Digital Tax.
1. 1.75% MoMo tax on transactions above GH100
2. 1.75% Bank tax on all Bank transfers
3. 1.75% Diasporan tax on all remittances.
Surprisingly it is to be used to buy buses and support Road Fund. How do you reverse 2 decades of Digital progress?🦁

— Sam ‘Dzata’ George (@samgeorgegh) November 17, 2021

In the 2022 budget, the government also abolished collection of road tolls in a bid to check pollution and ease traffic.

A GH¢1 billion ($195 million) “YouStart” initiative is also being rolled out annually to support the teeming youth to set up their own jobs.

The government said the initiatives are crucial in building a sustainable entrepreneurial nation.