In recent years, governments in lower-income countries have increasingly introduced specific 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 have noted 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/day threshold to limit the tax burden on lower-income groups. This paper uses 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 it is perceived.
We find that, while the overall effect of the E-levy is highly regressive with users in the bottom quintile paying the largest share as a proportion of their income, the threshold is effective in sheltering some lower-income users from facing a new tax burden. We find that home-based informal workers are disproportionately burdened by the tax, relative to street vendors and market traders. Further, we show that most informal workers disapprove of the E-levy, reflecting both concerns about its impact on equity and disappointment with the government’s performance. Notably, while women are less likely to be liable for E-levy payments, they are substantially more likely to disapprove of its introduction.
Nana is an Associate Professor at the Institute of Statistical, Social and Economic Research (ISSER) and the Director of the Centre for Social Policy Studies (CSPS), both at the University of Ghana. Her research areas focus on social policy and social development.
Max is a Research Fellow at the ICTD. His research specialises in the politics of informal and illegal economies, the political economy of the Middle East and North Africa and development politics. He completed his PhD at the London School of Economics. Max co-leads the informality and taxation programme with Vanessa, as well as the ICTD’s capacity building programme.
Michael Rogan is an Associate Professor in the Department of Economics and Economic History and the Neil Aggett Labour Studies Unit (NALSU) at Rhodes University. Since 2011 he has been a research associate in the global research and advocacy network, Women in Informal Employment: Globalizing and Organizing (WIEGO). He holds a PhD and a Master’s degree in Development Studies and a Bachelor of Arts in International Studies from the University of Washington in Seattle. His research interests include: gender, informal employment, health, poverty and inequality, and education and skills development.
Vanessa is a Research Fellow at the ICTD and a Senior Research Associate at the Munk School of Global Affairs and Public Policy at the University of Toronto. She completed her PhD thesis on informal revenue generation and statebuilding in Sierra Leone, and has ongoing research on the topic in the Democratic Republic of the Congo and Somalia. Vanessa leads the ICTD’s new programme on civil society engagement in tax reform and co-leads the research programme on informal taxation.
Authors: Nana Akua Anyidoho, Max Gallien, Mike Rogan & Vanessa van den Boogaard
Date: September 2022
Citation: Akua Anyidoho, N.; Gallien, M.; Rogan, M. and van den Boogaard, V. (2022) 'Mobile Money Taxation and Informal Workers: Evidence from Ghana’s E-Levy', ICTD Working Paper 146, Brighton: Institute of Development Studies, DOI:10.19088/ICTD.2022.012