How can we make Ghana’s e-levy, or MoMo tax, equitable and fair?

By Dr Shadrach Dare

Under the current arrangements, any MoMo transaction over GH₵100 per day attracts a 1.5% e-levy, compared to a GH₵20,000 threshold for interbank transfer. It is argued that anyone who earns over GH₵3000 per month is not poor and so should pay the e-levy. This thinking is flawed as it assumes that anyone who earns over GH₵3000 sends or spends GH₵100 per day.

Our current economic structure- where young people work to feed their aged parents or support relatives because government structures have failed to provide (including pensions) means that people will have to support relatives each month. Rather than send these dependants GH₵20 per day- you are likely to send GH₵600 so that they are able to manage themselves. The former will attract no e-levy but the latter will. In another instance, a family that earns GH₵1000 per month may rather go to the shop to buy groceries for the month which may cost them GH₵150 – rather than pay for food worth GH₵5 per day. The former encourages families to plan and manage their limited resources. So in my opinion, it appears that charging e-levy on monthly transfers over GH₵3000 makes more sense.

Most MoMo users are the working and middle class. For people who are unlikely to have a bank account, or in villages where there are no banks, MoMo is their alternative. So that charging e-levy on MoMo transactions seems to rather target the poor in communities with no banks. This targets the poor and is unfair.

For daily interbank transfers over GH₵20,000 not to attract e-levy confirms the point in the paragraph above. The rich or those in the cities who can use online bank transfer options seem to have an alternative to avoid e-levy but the poor and those in villages don’t. It also appears that the GH₵20,000 threshold allows the rich to avoid paying e-levy. If the government considers someone who earns GH₵3000 PER MONTH to be rich and so should pay e-levy- what do you call someone who can pay GH₵20,000 PER DAY? It makes no sense! [The argument of trying to protect businesses makes no sense because many market women use the MoMo platform to transfer money].

Finally, what is the real value of GH₵100 per day in today’s Ghana? What can you really purchase with GH₵100? Does that sound like a rich person? Under the current arrangements, gifts are taxed, hospital bills are taxed, and money for baby foods and sanitary pads will all be taxed if they are paid via MoMo. The current MoMo tax strategy is, therefore, discriminatory, targets the poor and is unfair. It does not convey the spirit of the letter by taxing the untaxed or raising money from the middle class and rich.

I am not arguing that e-levy should not be passed. Rather I suggest the MoMo tax should be applicable on transactions over a monthly threshold rather than a daily threshold, even if it means lowering the threshold to GH₵2000 per month rather than GH₵100 per day. This way Bro Kwaku, the painter, can send GH₵300 to his mum in the village for her monthly upkeep without being taxed- rather than allowing Mr Mensah to send GH₵10,000 to his son without being taxed. #FixElevy #MoMotax #elevy #Ghana #FixTheCountry

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