Fuel Levy vs. E-Levy: Ghana’s Tax Experiments and Their Impact on Citizens

In recent years, Ghana has introduced two significant levies aimed at addressing fiscal challenges: the Electronic Transfer Levy (E-Levy) and the GH₵1 Fuel Levy. While both were designed to bolster government revenues, their implementation, public reception, and impacts have varied considerably. This article delves into a comparative analysis of these two levies, highlighting their objectives, outcomes, and the lessons they offer.

Fuel Levy vs. E-Levy

⚙️ Objectives and Implementation

E-Levy (Introduced May 2022):

• Purpose: To widen the tax net by capturing revenues from the burgeoning digital economy, particularly mobile money

• Mechanism: A 1.5% tax on electronic transactions, including mobile money transfers, bank transfers, and merchant

• Projected Revenue: Approximately GH₵6.9 billion annually.

  
  

GH₵1 Fuel Levy (Introduced June 2025):

• Purpose: To address a mounting energy sector debt of US$3.1 billion and ensure a stable power supply

• Mechanism: An additional GH₵1 charge per litre on petroleum products at the ex-pump level.

• Projected Revenue: An estimated GH₵5.7 billion annually. 

📊 Impact Assessment

E-Levy:

• Revenue Shortfall: Despite high projections, actual collections fell significantly short, raising concerns about its efficacy. 

• Behavioral Changes: The levy led to a noticeable decline in mobile money transactions, as users sought to avoid the additional charges.

• Regressivity: Studies indicated that the levy disproportionately affected lower-income individuals, making it a regressive tax. 

  
  

GH₵1 Fuel Levy:

• Immediate Price Impact: The government assured that the strong performance of the Ghanaian cedi would cushion consumers from immediate price hikes. 

• Public Reception: While some stakeholders acknowledged the necessity of the levy, others expressed concerns about its timing and potential burden on consumers.

• Revenue Allocation: Funds from the levy are earmarked specifically for fuel procurement for power generation, aiming to ensure transparency and targeted use.

  
  

🧭 Public Perception and Political Ramifications

E-Levy:

• Widespread Opposition: Surveys revealed that over 79% of Ghanaians favored discontinuing the E-Levy, citing concerns about increased financial burdens. 

• Policy Reversal: In response to public outcry and as part of campaign promises, the government repealed the E-Levy in April 2025.

  
  

GH₵1 Fuel Levy:

• Mixed Reactions: While some view the levy as a necessary step to stabilize the energy sector, others criticize it as an added financial strain, especially amidst existing economic challenges.

• Political Dynamics: The levy has sparked debates in Parliament, with opposition parties questioning its implementation and potential impact on the populace.

  
  

🔄 Comparative Analysis

Aspect	E-Levy	GH₵1 Fuel Levy
Target Sector	Digital Transactions	Petroleum Products
Tax Mechanism	Percentage-based (1.5%)	Fixed amount (GH₵1 per litre)
Revenue Projection	GH₵6.9 billion annually	GH₵5.7 billion annually
Public Reception	Highly Unpopular	Mixed Reactions
Policy Outcome	Repealed in April 2025	Currently Implemented
Impact on Behavior	Decrease in mobile money usage	Potential increase in fuel prices
Regressivity	High (affecting low-income individuals)	Moderate (affecting all fuel consumers)

The contrasting trajectories of the E-Levy and the GH₵1 Fuel Levy underscore the complexities of tax policy implementation in Ghana. While both aimed to address fiscal challenges, their outcomes highlight the importance of stakeholder engagement, transparent communication, and careful consideration of socioeconomic impacts. As Ghana continues to navigate its economic landscape, these experiences offer valuable lessons for future policy formulations.