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0 A Professor of Finance at the University of Ghana Business School, Professor Elikplimi Komla Agbloyor, has intimated that Ghana can significantly expand domestic revenue without raising headline tax rates by rethinking how income, particularly informal income, is identified and taxed.
Citing the Electronic Transaction Levy (E-Levy) that was abolished in 2025 as an example, he said the failure of the policy lesson was not to abandon digital taxation, but to design it properly.
“The Electronic Transactions Levy (E-Levy), which was abolished following the 2024 elections, was widely unpopular. Its core weakness was conceptual: it taxed transactions, not income. Transfers for savings, family support, and routine financial management were taxed regardless of whether the recipient earned income. Yet the fundamental idea behind the E-Levy—bringing the informal sector into the tax net— was sound. In 2024 alone, the levy raised approximately GH¢2 billion, despite its flawed design”, he disclosed in an article titled “Changing the Narrative: From Persistent Fiscal Deficits to Fiscal Surpluses”.
Digital Income Withholding Tax (DIWT)
Professor Agbloyor, proposed a Digital Income Withholding Tax (DIWT), saying it is not a levy on digital transfers, but a framework that uses electronic payment systems and artificial intelligence to identify and tax legitimate income.
“The principle is simple and widely acceptable – only transactions that represent income should be taxed”, he added.
Under DIWT, electronic payments—particularly mobile money transactions—are classified at the point of payment by the sender.
Professor Agbloyor said when a transaction is identified as income, for example, wages or payment for services, a small withholding tax is deducted automatically by the payment service provider and remitted to the government.
Consider informal employment, which dominates Ghana’s labour market, if a household pays a driver, cleaner, gardener, or artisan via mobile money, the payer selects “payment of income” or “payment for services” in the app. A 5% withholding tax is deducted from the amount received by the worker and remitted directly by the payment service provider
For example, on a GH¢300 payment, the worker receives GH¢285, while GH¢15 is paid to the state. The low rate is intentional: it encourages compliance, reflects the typically low incomes in the informal sector, and aligns with progressive taxation principles”, he added.
Ghana’s fiscal challenges are well known. Between 2019 and 2024, the country recorded an average overall fiscal deficit of about 8% of Gross Domestic Product, while the primary balance averaged 2.6% of GDP.
