The International Centre for Tax and Development is calling for a reassessment of the implementation of the e-levy to make the tax more effective.

The Center is of the view that a review will help address the public misconceptions of the tax and make it more effective.

E-levy was introduced in May 2022 and stirred waves of debate within the country's financial landscape.

Despite its contentious nature, the Centre in partnership with the Ghana Revenue Authority (GRA), has highlighted the importance of Digital Financial Service taxation in Ghana and reviewed the impact of mobile money taxation on the country.

Martin Hearson, the Research Director of the International Centre for Tax and Development, provided insight into Ghana’s E-Levy, stressing the importance of informed discussions and their key findings regarding the impact of the tax on the mobile money market and individuals, especially the poor.

According to him, the significance of Ghana's e-levy as an important tax, generating over a billion city of revenue annually, is subject to review and debate, particularly in the upcoming election campaign, emphasising the need for robust research to inform discussions.

Mr Hearson said the findings from their research, indicated that while concerns existed regarding the potential impact of the tax on the mobile money market, the observed effects were modest and temporary.

He noted that despite affecting the poor more than wealthier individuals, the tax design is considered relatively progressive, citing the exemption threshold of GH¢100 per day on transactions as a significant protective measure for the poor.

Mr Hearson acknowledged the potential regressiveness of the tax, noting that while the poor are more likely to use mobile money, the exemption threshold has helped alleviate its impact on them.

He recommended that the government revise the threshold in line with inflation to maintain its effectiveness.

Additionally, Hearson emphasized the significance of research and modelling to evaluate the effects of various thresholds and rates on the poorest, highlighting collaborative efforts by governmental and independent entities to inform future tax design discussions.

Mr Hearson highlighted the persistence of digital financial services taxes across Africa, including Ghana's adaptation of tax policies amidst public pressure.

He emphasised the need for these taxes to balance revenue optimization with mitigating negative impacts on financial inclusion and the most vulnerable.

Additionally, his research uncovered a lack of understanding among Ghanaians about the tax's design, suggesting that improving awareness could enhance compliance and government objectives.

On her part, Roselyn Adadzewa Otoo from the Institute of Statistical Social and Economic Research also emphasised the common challenges faced across Africa in the implementation of digital financial service taxation, particularly the taxation of mobile money.

She highlighted that this experience is not unique to any single country and has been observed in several countries throughout the continent.

Otoo stressed the importance of generating data and evidence to inform government decisions regarding taxation policies, advocating for active collaboration between policymakers and academia throughout the policy process, from design to evaluation.

She further underscored the need for academia to play a more active role in policy development, emphasising the importance of collaborative efforts to address challenges and enhance policy effectiveness.

Otoo highlighted academia's ability to provide insights from other jurisdictions and similar situations, aiding in the anticipation and mitigation of potential problems.

She emphasised that academia can offer valuable support in policy design, implementation, and monitoring, drawing on learnings from other countries to inform decision-making and facilitate progress.

Charles Addae, the Deputy Commissioner in charge of Strategy, Research, Policy, and Programmes at the Ghana Revenue Authority, also told JoyNews the challenges encountered during the implementation of Ghana's levy introduced in 2022.

He mentioned that despite initial difficulties, improvements were made in 2023, resulting in the collection of approximately ¢1.2 billion in revenue.

Addae emphasised the importance of enhancing tax revenue without overburdening existing taxpayers, noting the need to explore new avenues, particularly the informal sector, to broaden the tax base and ensure broader participation in revenue generation.

He expressed concern about Ghana's GDP being below that of peer countries and stressed the need to focus on expanding the tax base rather than constantly introducing new tax types.

Despite the levy's unpopularity among citizens, Addae advocated for sustaining the revenue generated from it to avoid overreliance on loans, which could negatively impact the economy.

The discourse on Ghana's e-levy underscores collaboration and informed decision-making. Insights into its impact on mobile money markets and the poor highlight the complexity of tax design.

Efforts to enhance tax revenue underscore the need for careful policy formulation.