Presentation on a study aiming to highlight significant events relating to the introduction of the e-levy in Ghana and investigate the effects. Presented at the GRA & ICTD conference "Taxing Mobile Money: Lessons and Ways Forward".

1. The Certainty in the Uncertain E-
Levy: a Money Supply Reflections
Benjamin Amoah, PhD
Department of Finance University of Ghana Business School, Accra, Ghana
Executive Director,
Center for Economics Finance and Inequality Studies (CEFIS), Accra
Prof Anthony Amoah
School of Sustainable Development, University of Environment and Sustainable
Development, Somanya, Ghana
Director
Center for Economics Finance and Inequality Studies (CEFIS), Accra
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2. Outline
• Introduction
– Fears / concerns
– Objective
• Literature
• Methods
• Results and Discussion
• Conclusion and Recommendation
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3. Introduction
• Mobile phone users in Ghana are charged a Communication
Service Tax (CST) since 2008, the current rate is 5%.
• The need to widen the tax net from 13% to 16%.
• Reason for the e-levy :
– to shore up government revenue,
– to provide support for entrepreneurial activities and
– to mobilize tax revenue from the informal sector,
• The e-levy was announced in 2021 at 1.75% and introduced in
May 2022.
• The E-levy rate was initially at 1.5% but later reduced to 1%
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4. The Fears
• E-Levy will propel the usage of cash and by extension
derail the gains made in financial inclusion.
• E-levy to derail the cash-lite efforts of the Central
Bank
– Currency management and printing cost to
increase
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5. Objectives
• Highlight significant events relating to the
introduction of the e-levy in Ghana.
• Investigate the effect of e-levy on Momo values.
• Assess the effect of e-levy on M1 and M2
• Evaluate the effect of e-levy on Momo transactions in
Ghana
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6. Literature
Theoretical
 Theory of trust, Tax morale- willingness to pay, the fiscal exchange theory,
social influence theory, political legitimacy theory and comparative
treatment theory are relevant to tax payment.
Empirical review
• Ghanaians have the mindset to reduce electronic transactions if
the e-levy is implemented, (Amoah & Amoah, 2022, Nutassey,
Agyei, Frimpong, & NoKoe, 2023).
 E-levy is regressive, informal workers disapprove of it and from
equity perspective taxes on digital financial services should be
reconsidered (Anyidoho, Gallien, Rogan, & van den Boogaard,
2023).
 Negative effects on e-levy on the value of mobile money transactions,
number of mobile money transactions, and value of mobile money
transactions but diminishes over time, (Owusu-Takyi 2024).
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7. Method
• Trend analysis
• Regression
𝑌𝑀𝑇𝑡=𝛼 + 𝛽1𝑒𝑙𝑒𝑣𝑦𝑡 + 𝛽2𝑀2𝑡 + 𝑒
Where the dependent variable is Momo transactions, e-levy is a categorical
variable with values, 0 (reference category) ,1% and 1.5%, M2 is money
supply and e is the error term.
Following the recommendation of Kao, Chihwa, and Min-Hsien Chiang (1998),
we estimate a Fully Modified Ordinary Least Square (FMOLS)
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8. Results - Demonstration in the Street
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9. Results - Fight in Parliament
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10. Results
3325.1
1673.8
1582.8
0
500
1000
1500
2000
2500
3000
3500
Momo Value (Gh¢ '000)
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11. Results
0.00
10,000.00
20,000.00
30,000.00
40,000.00
50,000.00
60,000.00
Money Supply Differenced (M2-M1)
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12. Results
0.00
50,000.00
100,000.00
150,000.00
200,000.00
250,000.00
300,000.00
MONEY SUPPLY
Broad Money (M2) Narrow Money (M1)
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13. Results
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14. Correlational Regression Results
(1) (2) (3)
VARIABLES OLS 1 OLS 2 FMOLS
Reference Category ==0
E-levy rate ==1% -2.6535** -0.9253*** -1.1003***
(1.285) (0.273) (0.132)
E-levy rate==1.5% -2.8897* -0.5574*** -0.6491***
(1.512) (0.126) (0.066)
Controls
Money Supply (Log M2) No 3.2879*** 3.7291***
(0.661) (0.336)
Year/Month Dummies No Yes Yes
Robust Standard Errors No Yes N/A
Constant 5.3055*** -35.2812*** -40.3105***
(0.617) (7.564) (3.846)
Observations 60 28 27
R-squared 0.104 0.825 0.905
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Dependent Variable: Momo Transactions (Log)
Standard errors in parentheses (Robust & Otherwise)
*** p<0.01, ** p<0.05, * p<0.1

15. Conclusion-From the Ghana Experience
• There will be a public/ political push-back away from the e-levy for
any country that attempts to introduce such a levy.
• The fear that the e-levy will lead to a reduce momo value and momo
transactions is rather for a short period of time and diminishes over
time. (What if there is a disaggregation of data on e-levy chargeable
transactions (5%-6%) from e-levy exempt transactions)
• The fears of reverting to cash based economy and reversal in
financial inclusion as a result of e-levy is not supported in our
studies.
• The introduction of e-levy (1% and 1.5%) has a negative relation with
momo transaction in Ghana.
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16. Recommendation
• Don’t abolish the e-levy so long as
– It contributes to national revenue, Ghc 613m in
2022 and Ghc1.12b (100%) in 2023.
– has no negative effect on financial inclusion,
– No negative effect on cash-lite efforts or cashless
economy
– No sustained negative effect on M2
– Government upholds transparency in the
mobilization and disbursement of e-levy funds.
– The poor is not hard-hit by the e-levy
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17. Thank You
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18. References
• Amoah B., Amoah A. (2022) A survey report on the proposed electronic levy in Ghana.
• Anyidoho, N. A., Gallien, M., Rogan, M., & van den Boogaard, V. (2023). Mobile money taxation and informal workers:
Evidence from Ghana's E‐levy. Development Policy Review, 41(5), e12704.
• Kao, Chihwa, and Min-Hsien Chiang. (1998) On the estimation and inference of a cointegrated regression in panel data.
Unpublished paper, Syracuse Univer
• Nutassey, V., Agyei, S., Frimpong, S., & NoKoe, K. (2023). Introducing electronic transaction levy in Ghana: A possible curse or
a blessing? The public’s perception. Cogent Economics & Finance, 11(1), 2167361.
• Paul Owusu Takyi (2024): The impact of electronic levy on mobile money transactions: lessons from Ghana, Policy Studies,
DOI: 10.1080/01442872.2024.2303348
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