Post-COVID economic crisis, citizen-state relations, and the Electronic Transactions Levy (E-levy) controversy in Ghana

Kofi Takyi Asante, Emmanuel Kumi and Michael Kodom

World Development Perspectives, 2024, vol. 35, issue C

Abstract: In 2021, the Government of Ghana sparked controversy by introducing the Electronic Transactions Levy (E-Levy) as part of an aggressive programme of revenue mobilisation in response to the debt-induced economic crisis that swept through the Global South in the wake of the COVID-19 pandemic. This paper contributes to the literature on the politics of economic crisis by demonstrating the consequences of prioritising revenue mobilisation over social protection during times of economic shocks. Drawing on in-depth interviews with a range of respondents, we argue that the outrage triggered by the introduction of the E-levy was rooted in longstanding grievances against the lack of reciprocity in citizen-state relations and an apparent breakdown of the fiscal contract. The tax provoked denunciatory narratives of economic mismanagement and government insensitivity, thereby underscoring the crisis of political legtimacy in Ghana. By ‘loosening the safety net’ and ‘tightening the tax net’ at a time when the country was battling an economic crisis and still grappling with the fallouts of the COVID-19 pandemic, the government created the conditions that exacerbated the already fraught citizen-state relations. Given the low tax morale, citizens are actively adopting various strategies to avoid paying the tax, including reverting to the use of cash and reducing the value and frequency of transactions.

Keywords: Tax bargaining; Fiscal contract; Citizen-state relations; Political legitimacy; E-levy; Post-COVID economic crisis (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:wodepe:v:35:y:2024:i:c:s2452292924000584

DOI: 10.1016/j.wdp.2024.100621

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