A test of behavioural changes to electronic levy

Abstract

Even before its introduction, the electronic levy in Ghana stirred updifferent behavioural reactions from the public, despite the intention to use itsproceeds to provide better public services. As a result, this study examines some ofthese behavioural changes using pre-tax survey data on the proposed electroniclevy. Using a sample size of 2,810 individuals with mobile money accounts, weestimate a multivariate logit model with its marginal effects to determine theassociated drivers of individuals’ behavioural changes to the proposed tax. Theresults show that the electronic levy is likely to have an immediate impact on anindividual’s behaviour in positive and negative ways. Thus, while about 88% of therespondents indicated that they are likely to stop using mobile money or reducetheir transactions, approximately 12% of the respondents rather reaffirmed theirwillingness to keep using mobile money or perhaps increase their mobile-moneytransactions. Furthermore, we find evidence that income, marital status, objectiveknowledge, trust in government, and the implementation timeframe are the statistically significant determinants of behavioural changes to the electronic tax inGhana. The results suggest varying behavioural responses to the electronic levy inGhana, which threaten the realization of expected revenues. We recommend propereducation and advocacy at all levels and a keen consideration to implement thelevy later, perhaps, when there is more trust in the government’s ability to use taxrevenues prudently.