In a major policy shift, the Government of Ghana has announced its intent to scrap the controversial levy on electronic transactions, popularly known as E-Levy, and the recently introduced tax on betting. According to the Finance Minster designate, Dr. Cassiel Ato Forson, this will feature prominently in the 2025 budget presentation as part of the government’s way of ensuring relief for Ghanaians and subsequently guaranteeing economic growth.
Why the E-Levy is Being Scrapped
The E-Levy is a relatively new tax policy initiated in 2022, geared at increasing government revenue through the imposition of levies on mobile money transfers, bank transfers, and online electronic transactions. The rate, though initially pegged at 1.5%, was reduced to 1% due to widespread resistance. It has fast become one of the most contentious policies of the past administration, with many Ghanaians taking to social media to berate its impact on financial inclusion and general ease of doing business. With so many people moving cash in their hands to evade it and failing to get close to a projected expansion in government revenues resulting in e-payment, it thus missed hitting some of the government’s financial projections as planned.
Dr. Forson said the scrapping of the E-Levy was evidence that the government listens to the people and that financial inclusion must be ensured. “The levy was meant to accrue revenue, but it has been counterproductive in terms of promoting a digital economy,” he said. “Its removal will provide much-needed relief to Ghanaians and enhance economic activity.”
Betting Tax Also Axed
Aside from the E-Levy, the government has also scrapped the recently introduced betting tax, which had also been very contentious. The tax was meant to regulate the fast-growing betting industry, but it was criticized for affecting the youths, who are the majority in betting. There were concerns that such a tax would drive many towards illegal or unregulated platforms, exacerbating challenges in the sector.
According to Dr. Forson, scrapping both taxes was meant to calm public discontent and set the industries on a course of growth that would be sustainable. “These taxes were introduced with the intention of boosting revenue, but we have seen their unintended negative effects,” he said.
What This Means for the Digital Economy
Scrapping the E-Levy is likely to have a positive effect on Ghana’s digital economy, especially in mobile money and e-commerce. Mobile money services, which had grown at a snail’s pace after the levy was introduced, are expected to rebound as the tax burden is lifted. This would most likely be increasing access to financial services among the rural population and fostering small businesses dependent on mobile money for transactions.
Scrapping the E-Levy and the betting tax fits within the larger strategy of the government to make the environment more conducive for economic activities and to enhance digital financial inclusion. The government, therefore, hopes that these reduced barriers to electronic transactions will spur growth in e-commerce, fin-tech, and other digital services that are all integral parts of the future of the Ghanaian economy.
The fact that such changes could guarantee a more dynamic and inclusive economy, to which digital platforms can contribute a great deal, is widely expected with the advent of the 2025 budget.
