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0 Economics professor Godfred Alufar Bokpin has hailed government’s decision to scrap the electronic levy (E-Levy), describing it as a much-needed correction to a “poorly designed” and “backward” policy.
“We’ve heard from the stakeholders and the vendors, and I think Ghana is waking up,” he said in an interview on Joy News’ PM Express on Wednesday.
“I congratulate the government for taking that decision.”
The controversial tax, introduced as part of revenue mobilisation efforts, had been widely criticised for discouraging financial inclusion and imposing an unnecessary burden on taxpayers.
According to Prof. Bokpin, the policy failed on multiple fronts, including compliance costs, inconvenience, and economic logic.
“If you look at the last two and a half years of the NPP administration, almost every six months, you have to reconfigure your system to be tax compliant. The compliance costs incurred by banks, financial institutions, and manufacturing companies—just to be compliant—are huge,” he explained.
He argued that the policy had not been subjected to the necessary scrutiny before implementation.
“Even at the Ministry of Finance, the tax policy unit, I’m not sure this one was really subjected to critical analysis, sensitivity analysis, and all of that. So if it’s more emotionally driven, and the results are quite clear, then it tells you it was poorly designed.”
Prof. Bokpin lamented the economic irrationality of taxing transactions that are already within the tax net.
“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,” he remarked.
He expressed optimism that the removal of the tax would revitalise digital financial transactions and enhance financial inclusion.
“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 noted.
For Prof. Bokpin, taxing mobile money transactions was an ill-conceived move that contradicted economic principles.
“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.
He maintained that the tax’s failure was evident from the disparity between projected and actual revenue.
“If you see the actual versus the expected revenue, it tells you that this was not a policy that clearly went through the filtering process,” he said.
With the government reversing course, Prof. Bokpin believes this is an opportunity for better tax policy formulation.
“I have a different view on taxation, and I think we can do it right. But this particular tax? The numbers have shown—it did not work.”
