E-Levy implementation: MTN to cap MoMo service fee at GH¢7.5

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Mtn
Mtn

MTN Ghana says it will cap its mobile money service fee at GH¢7.5 for any transfer from GHS1,000 and beyond when the 1.5 per cent electronic transfer levy (e-levy) is implemented.

Currently, the cap is on GH¢10, but MTN and other telcos have already announced a 25% decrease in transfer fees if e-levy comes on stream.

What was not clear was whether the the reduction was going to apply to the cap, and the CEO for MTN MobileMoney, Eli Hini has confirmed to Techgh24 that the cap will reduce to GH¢7.5.

Vodafone however still maintains a zero-rate on all transfers to all networks till date. Some Vodafone customers have been asking to know if the telco will also absorb the e-levy, but it has not announced any such gestures.

Background

E-levy was first announced by Finance Minister Ken Ofori-Atta in his 2022 Budget presentation to Parliament. It was initially 1.75% but due to reasons only known to government, it has been reduced to 1.5%.

Indeed, it remains a controversial tax because the Minority in Parliament, civil society groups, industry players and several Ghanaians are still opposed to it.

Indeed, long before it was every mentioned, the champion of Ghana’s digital transformation, Vice President Mahamudu Bawumia kicked against any plans to tax mobile money saying that it is a pro-poor platform that is driving financial inclusion, and taxing it will impact government’s own digitalisation drive negatively.

The Government however managed to get the Bill for its implementation passed in Parliament amidst a walkout by Minority MPs, some of whom are currently in court challenging the legality and constitutionality of the passage of the Bill.

While the case is yet to be determined, President Nana Addo Dankwa Akufo-Addo has hurriedly assented to the Bill to make it law, pending implementation in May 2022.

Weeks before the passage of the Bill, the tax collector, Ghana Revenue Authority (GRA) issued implementation guidelines which had timelines indicating the government was preparing to implement the tax in three phases, starting between late March and early April.

In the march to this point, government officials have been on an errand to parts of the country holding townhall meetings and churning out some untruths and half truths just to convince Ghanaians to accept the tax.

They for instance, said at 1.75%, e-levy is the lowest tax rate. Meanwhile, their own Health Levy stands at 1%, much lower than the rate of the e-levy. Again, the claimed there is a 10% e-levy on British citizens, but that was also fact-checked and found to be a palpable falsehood.

As government, its institutions and industry players prepare to implement the e-levy in May, the point has been made that everywhere an e-levy or its type has been implemented on the continent, it has failed because it impacted negatively on the use of mobile money and failed to yield the expected result.

In the case of Ghana, government is targeting some US$1 billion to get the economy back on track from being hit by Covid-19, and now the Russian invasion of Ukraine. Only time will tell if the government took the right decision in imposing the e-levy in spite of the huge public outcry against it.

Meanwhile, Vice President Bawumia has been very silent on e-levy since it was announced by his government.

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