E-Levy rakes in 11% revenue for Q1 2023

E Levy E Levy Electronic Transfer Levy1.png Mobile Money transactions in the first four months of 2023 has reached GH¢550.4bn

Thu, 25 May 2023 Source: thebftonline.com

At the 25 percent mark of the year, data from the Ghana Revenue Authority (GRA) reveals that the Electronic Levy (E-Levy) generated GH¢246.9million in revenue, accounting for 11 percent of the projected GH¢2.24billion for the year.

Since its implementation 11 months ago in May 2022, the E-Levy had generated a total of GH¢861.47million revenue by March 2023.

In its first seven months, the E-levy, set at a rate of 1.5 percent, contributed GH¢614.57million; thereby surpassing the multi-revised target of GH¢611million. Revenue from it has shown consistent, albeit marginal, growth since the inception of the E-levy, according to the GRA.

In May 2022 the levy generated GH¢53.58million, which rose to GH¢59.23million for June 2022. The numbers continued to climb – reaching GH¢65.07million in July 2022, GH¢71.29million in August 2022, GH¢78.95million in September 2022, GH¢85.73million in October 2022, and GH¢93.3million in November 2022.

In December 2022, E-levy revenue crossed the milestone of GH¢100million; reaching GH¢106.79million. However, the revenue line witnessed a decline at the beginning of 2023 due to a reduction in its rate from 1.5 percent to 1 percent.

During the first quarter of 2023, the E-Levy generated GH¢246.9million. In January 2023 the returns amounted to GH¢85.93million, which declined to GH¢73.99million in February 2023 – representing a decrease of approximately 13.9 percent. However, March 2023 witnessed a recovery as it generated GH¢86.98million; resulting in a total collection of GH¢246.9million for the first quarter.

It is important to note that the initial target for the E-Levy in 2022 was GH¢6.9billion, equivalent to US$1.1 billion at the time. However, due to implementation delays, the target was repeatedly adjusted downward. In April 2022, it was revised to GH¢4.5billion and then further lowered to just under GH¢800million in the first month of implementation.

Meanwhile, during the 2022 mid-year budget presentation in July, another revision was announced setting the E-levy revenue target at GH¢611million… representing 8.9 percent of the initial target.

Finance Minister Ken Ofori-Atta acknowledged during the 2023 budget presentation that the E-levy had not achieved the projected revenue: “Post-COVID, we identified the need to ramp up our domestic revenue mobilisation efforts to match the performance of our peers and finance our development agenda. Last year we started with the E-levy, which has not yielded the resources as expected”.

Even government is seeking to raise the tax to gross domestic product (GDP) ratio from 13 percent to the West African average of 18 percent, there are concerns that the levy could miss its target for the year.

Government projects an 18.16 percent increase for the levy in 2024, reaching a total of GH¢2.64billion. Additionally, the revenue line is expected to continue growing, with a projected increase of 14.87 percent in 2025 and 14.6 percent in 2026. This growth is estimated to result in contributions of GH¢3.03billion in 2025 and GH¢3.48billion in 2026.

In spite of concerns regarding the implementation of the E-levy, mobile money transactions reached GH¢1.07trillion in 2022. This happened despite a decline in mobile money transactions from GH¢90.5billion in March to GH¢77.4billion and GH¢77.2billion in June and July respectively, attributed to user-response to the enforcement of the E-levy.

Since then, mobile money transactions have seen a recovery. Notably, in December mobile money transactions reached a significant high of GH¢112billion; a remarkable 47.2 percent increase compared to the GH¢82.9billion recorded in December 2021.

In comparison, transactions conducted through cheques accounted for approximately a quarter of mobile money transactions, totalling GH¢254.4 billion. Internet banking also played a role, with GH¢80.3billion worth of completed transactions.

Already, the value of mobile money transactions in the first four months of 2023 has reached GH¢550.4billion – reflecting a significant year-on-year growth of 66.2 percent. This figure surpasses the total recorded for all of 2020, which amounted to GH¢503billion.

Source: thebftonline.com
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