On March 29, 2022, the Importers and Exporters Association of Ghana (IEAG) expressed strong dissatisfaction with the passage of the Electronic Transaction Levy (E-Levy), arguing that the timing was ill-suited amid rising economic hardships. With increasing prices of goods and services, ordinary Ghanaians were already struggling to make a living, exacerbating the impact of the new tax.
Reaction to Parliamentary Passage
Mr. Samson Awingobi Asaki, IEAG Executive Secretary, voiced concerns following the bill’s passage by the majority in Parliament after the minority staged a walkout. Asaki stated, “The passage would even make it very difficult to send some money to friends and relatives using mobile money to alleviate the hardship they go through,” highlighting that the additional charges would deter senders from using electronic platforms.
Potential Impact on E-Cash and Mobile Banking
Asaki expressed worry that the Bank of Ghana’s upcoming e-cash system would fail due to the E-Levy, as people would avoid electronic transactions to escape the tax. He also noted that mobile banking applications used by commercial banks for quick and easy transactions would likely see reduced usage, undermining efforts to promote digital financial services.
Advice to Importers and Exporters
To mitigate the E-Levy’s impact, Asaki urged importers and exporters to use cheques and cash for payments instead of electronic methods. He mentioned that paying taxes via mobile money would reportedly be exempt from the levy, providing a potential workaround for some transactions.
Context of the E-Levy Passage
The E-Levy bill, passed under a certificate of urgency on March 29, 2022, underwent second and third readings in a single day. Initially proposed at 1.75% on electronic transactions in the 2022 budget, the levy sparked widespread public controversy and protests. After government-led town hall meetings to explain its importance, the rate was reduced to 1.5%, effective from May 1, 2022, applying to mobile money payments, bank transfers, merchant payments, and inward remittances.
Economic Backdrop
The E-Levy’s passage came amid Ghana’s economic challenges, including a 14% cedi depreciation and 13.9% inflation in early 2022, which intensified financial pressures on citizens. The IEAG’s concerns reflect broader public discontent, as the levy was seen as adding to the burden of rising living costs, particularly for small businesses and individuals reliant on mobile money.
