Willingness to pay for electronic transaction levy: empirical evidence from Ghana

Abstract

PurposeIn countries where the electronic levy (e-levy) has been implemented, one question that resonates with the populace is, “how much would you want to pay for e-levy per transaction?” In response, varied perspectives have been shared with no convergence. Against this background, this study seeks to estimate people's willingness to pay (WTP) for electronic transaction levy in Ghana, while analysing the associated determinants.Design/methodology/approachThis study relies on a survey of 2,810 respondents obtained from February 9 to 16, 2022 in Ghana. A multivariate logit model was estimated with its marginal effects. Further, a robustness check was undertaken using the linear probability model to validate the results.FindingsWith respect to the sample, the authors find evidence that approximately 46% of the respondents are not willing to pay any amount per transaction for the e-levy. Second, about 21% of the respondents are willing to pay Ghs0.5% as e-levy per transaction. Furthermore, about 10% of the respondents are willing to pay 1% per transaction as e-levy. Those who indicated that they would pay rates above 1% (specifically, 1.50%–1.75%) per transaction are less than 5%. For flat rates, approximately 10% of the respondents were willing to pay Ghs5 per month for all transactions above Ghs100. All others who are interested in other flat rates together are less than 5% of the respondents. The key statistically significant determinants of the probability that an individual would be willing to pay for the e-levy are also provided. This study recommends a comprehensive dialogue between the government and all stakeholders to reach a reasonable conclusion on an acceptable e-levy rate and by extension, implementation strategies.Originality/valueTo the best of the researchers' knowledge, this is the first empirical study that estimates individuals' willingness to pay for e-levy on electronic transactions in a developing country.