Societal mistrust and electronic levy compliance: Evidence from Ghana’s e‑levy

This study explores how multiple dimensions of societal mistrust shape tax compliance within Ghana’s electronic transfer levy (e-levy). While existing research mainly centres on trust, we examine mistrust as a distinct psychological construct manifesting active cognitive vigilance and monitoring rather than merely the absence of trust. Utilizing survey data from 3,773 respondents, the analysis reveals that both interpersonal and institutional mistrust significantly reduce compliance in this widespread informal economy setting. Notably, mistrust in the Ghana Revenue Authority (GRA) is associated with a reduction in e-levy compliance of over 40 percentage points, far surpassing the impact of interpersonal mistrust, which reduces compliance by approximately 18 percentage points. The study broadens the Slippery Slope Framework by demonstrating that mistrust operates through mechanisms distinct from low trust, manifesting as a rational rejection of the fiscal contract when citizens perceive failures in public financial management and tax authority accountability. In developing economies, these institutional credibility issues lead to strategic non-compliance and behavioral avoidance rather than mere apathy. The findings contribute to the behavioural economics of tax compliance and institutional trust by showing that institutional accountability reforms and fiscal transparency constitute demand-side governance changes that may yield larger compliance gains than supply-side enforcement intensification alone in low-trust environments.