The government’s decision to scrap the electronic transfer levy (E-Levy) is expected to drive a resurgence in mobile money (MoMo) transactions and enhance financial inclusion. This is according to Economics Professor Godfred Alufar Bokpin.
Speaking on PM Express on Wednesday, March 26th, 2025, Prof. Bokpin described the move as a necessary correction to a policy that had hindered digital financial growth. He noted that the levy discouraged mobile money usage and imposed unnecessary costs on individuals and businesses.
“I think the good news is that we will see MoMo uptake again. It’s a very direct way of formalizing the informal system and promoting financial inclusion,” he stated.
A Controversial Tax from the Start
The E-Levy, introduced in May 2022 under the Akufo-Addo administration, was initially proposed at a 1.75% rate before being revised to 1.5% and later reduced to 1% in January 2023. It was designed to tax mobile money and other electronic transactions as part of efforts to boost domestic revenue. However, it was met with widespread public resistance, with many arguing that it stifled digital payments and contradicted the government’s financial inclusion agenda.
Prof. Bokpin explained that taxing digital transactions contradicted efforts to expand financial access, making it harder for informal sector players to integrate into the formal economy.
“If you look at that channel and the role financial inclusion plays in promoting consumption and economic growth, you will not situate a tax along that path,” he argued.
Beyond its economic impact, the tax also posed compliance challenges for financial institutions and businesses. Prof. Bokpin pointed out that companies had to constantly adjust their systems to accommodate new tax measures, increasing operational costs.
Double Taxation Concerns and Policy Reversal
One of the biggest criticisms of the E-Levy was the issue of double taxation. Many taxpayers, including salaried workers, had already paid income tax before sending money to family members or business associates, yet they were charged again under the E-Levy.
“You send money to your wife after having paid your taxes, and you have to pay a lot of tax on it again. I don’t want to say it’s evil, but it was backward,” Prof. Bokpin remarked.
With the removal of the E-Levy, Prof. Bokpin expressed confidence that digital transactions would regain momentum, fostering a more inclusive financial system and supporting economic growth.
