Mobile Money Taxation and Informal Workers: Evidence from Ghana’s E-Levy

Abstract

In recent years, more and more governments in lower income countries have been introducing taxes on mobile money transfers as a means to raise revenue. These are often explicitly promoted as a way of taxing informal economic activity, but critics point out their potential negative impact on lower-income groups. Ghana’s electronic transfer levy (E-levy), introduced in May 2022, is a particularly interesting case study. It was explicitly justified as a way of taxing Ghana’s informal economy but includes a 100 cedi ($8.80) per day threshold to limit the tax burden on lower-income groups. Using data from a new survey of 2,700 self-employed informal workers in the Accra Metropolitan Assembly (AMA) collected in April and May 2022, we examine the likely impact of the E-levy on informal workers from an equity standpoint (with reference to earnings, gender and occupational sector), and explore how this relates to how the levy is perceived.