The National Democratic Congress government decision to abolish three controversial taxes—the Electronic Transaction Levy (E-Levy), the COVID-19 Health Recovery Levy, and the betting tax—has reignited a national conversation about the country’s fiscal direction, exposing the delicate balance between political responsiveness and economic sustainability.
While the move, announced in the government’s maiden budget in March 2025, was widely celebrated by households and businesses burdened by rising living costs, a new policy analysis reveals that the long-term implications may pose significant risks to revenue mobilisation and macroeconomic stability.
The study undertaken by the Centre for Policy Scrutiny (CPS) has revealed that the country stands to lose about GHS18.15billion from the scrapping of the taxes, money that could have been used for infrastructure upgrade.
The findings were presented at a public lecture organised by CPS on Tuesday, April 7, 2026, and delivered by fiscal policy specialist, Isaac Danso Agyiri.
The study, which examines the fiscal and equity implications of removing the two major revenue measures alongside the betting tax, indicates that while the policy shift provides some relief to households and improves equity outcomes, it comes at a significant cost to government revenue mobilisation.
The three taxes were originally introduced between 2021 and 2023 during one of Ghana’s most challenging economic periods in recent history.
In the aftermath of the COVID-19 pandemic, the country faced mounting public debt, high fiscal deficits, currency depreciation and credit rating downgrades.
In response, the government embarked on an aggressive domestic revenue drive, rolling out a series of new tax measures aimed at broadening the tax base and financing critical expenditure, including healthcare, infrastructure and youth employment initiatives.
Among these, the E-Levy—introduced in 2022 as a tax on electronic transactions—quickly became the most contentious.
Initially set at 1.75 percent before being reduced to 1 percent, the levy was designed to tap into the expanding digital economy and capture revenue from the largely informal sector.
However, it faced widespread resistance, with critics arguing that it disproportionately affected low-income earners and discouraged digital financial inclusion.
Early performance figures appeared to justify some of the skepticism, as the levy generated just over GHS643 million in 2022—less than 10 percent of its projected GHS6.9 billion.
Although collections improved in subsequent years, reaching GHS1.81 billion in 2024, the tax never fully met its ambitious expectations.
In contrast, the COVID-19 Levy, introduced in 2021 as a 1 percent charge on goods and services under the VAT system, proved to be a more stable revenue source. It consistently generated strong returns, exceeding targets in its early years and reaching nearly GHS3 billion in 2024.
Despite this performance, the levy was scrapped as part of broader VAT reforms aimed at simplifying the tax structure and reducing the cost burden on consumers.
The betting tax, introduced in 2023, was comparatively short-lived and far less impactful.
Designed as a 10 percent withholding tax on betting and lottery winnings, it significantly underperformed, generating less than GHS80 million—far below its projected GHS1.2 billion annual target. Its removal in April 2025 was justified as a relief measure for young people, who form the majority of bettors, though concerns persist about its social implications.
The CPS comprehensive fiscal analysis now suggests that the combined removal of these taxes could cost the government billions of cedis in lost revenue over the medium term.
The E-Levy alone was projected to generate GHS2.4 billion in 2025, with cumulative losses estimated at over GHS8 billion by 2027. Similarly, the COVID-19 Levy is expected to result in nearly GHS10 billion in foregone revenue between 2026 and 2027.
In comparison, the fiscal impact of abolishing the betting tax remains relatively minimal due to its weak performance.
Beyond revenue losses, the study highlights important equity considerations. The E-Levy, for instance, is widely regarded as regressive, disproportionately affecting low- and middle-income earners who rely heavily on mobile money for daily transactions. Its removal is therefore expected to improve disposable income and support financial inclusion.
The COVID-19 Levy, though intended to be proportional, also imposed a heavier burden on poorer households due to its consumption-based nature, making its abolition a source of relief for consumers.
The equity impact of the betting tax is more complex. While gambling is often seen as discretionary spending, evidence suggests high participation among unemployed youth, raising concerns that the tax may have disproportionately affected vulnerable groups. At the same time, its removal may inadvertently encourage increased betting activity, particularly in the absence of strong regulatory safeguards.
The broader policy dilemma emerging from these reforms is clear: while scrapping unpopular taxes may enhance public trust and ease financial pressures, it also weakens the government’s capacity to generate domestic revenue at a time of ongoing fiscal constraints.
Analysts warn that failure to replace these revenues could lead to increased borrowing or cuts in public spending, both of which carry significant economic consequences.
In response, the government has outlined several mitigation measures, including reducing the tax refund ceiling, strengthening tax compliance through enhanced audits, and implementing reforms under the new VAT regime to improve efficiency and broaden the tax base.
However, critics argue that some of these measures merely reallocate existing resources rather than generating new revenue.
Tax policy experts are now urging a more strategic approach. Isaac Danso Agyiri, a tax analyst, called for the possible reintroduction of some of the scrapped taxes in redesigned forms that address previous shortcomings.
According to him, the key lies in improving fairness, simplifying administration and building public trust through transparency and stakeholder engagement.
He argues that the rapidly growing digital economy presents a significant opportunity for more effective taxation, particularly if safeguards are introduced to protect low-value transactions while ensuring that higher-value activities contribute meaningfully to revenue generation.
He also emphasised the importance of clearly communicating how tax revenues are used, noting that public resistance often stems from a lack of trust and understanding.
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