Republicans in the US House of Representatives are pushing for a new tax to be imposed on remittances sent by migrants to relatives in less developed countries.
The US Republican-led House Ways and Means Committee unveiled a sweeping tax plan, dubbed “the one, big, beautiful bill,” which includes a controversial 5% tax on remittance payments.
If passed, the law would place a 5% levy on money sent from the US to individuals abroad — a move that would disproportionately affect immigrants, including Ghanaians living in the US. However, the bill makes exceptions for most remittance transfers made by US citizens.
Remittances have long served as a lifeline for families in Ghana, funding everything from food and school fees to hospital bills and small businesses. In 2024, Ghana received a significant amount of remittances, totalling US$6.65 billion. This represents a substantial increase from the US$5.11 billion received in 2023, a jump of $1.53 billion. US was one of the top sending countries.
Meanwhile, in 2024, global remittances are estimated to have reached US$905 billion, a 4.6% increase from 2023. This growth is larger than previously projected and exceeds the increase in Foreign Direct Investment. Remittances to low-and-middle-income countries (LMICs) like Ghana were projected to reach $685 billion in 2024.
The potential consequences of the tax could be serious. Analysts warn it could reduce the amount of money reaching developing countries and might even force senders to use informal channels to avoid the tax.
“There’s going to be a black market,” said José Iván Rodríguez-Sánchez, a research scholar at Rice University. “If your relatives need that money and you can’t afford to lose 5%, you’ll find ways to send it under the radar.”
Such a shift would hurt both the families who rely on timely remittances and the financial institutions, such as banks and money transfer services, that facilitate these transactions.
A reduction in legitimate transfers could also cut off a critical source of foreign exchange for countries like Ghana, putting pressure on the cedi and the broader economy.
Financial experts and diaspora advocacy groups are already voicing concern, urging U.S. lawmakers to reconsider the measure due to its potential humanitarian and economic impact. Some fear it could discourage legal financial practices while penalizing immigrants for supporting their families.
Though still under review, the bill’s inclusion of the remittance tax provision is likely to spark pushback from both Democrats and immigrant communities, making its future uncertain.
For now, Ghanaians at home and abroad are watching closely — hopeful that their vital economic lifeline will not be caught in the crossfire of American politics.
