VAT on electricity: Govt to rescind decision?

Significant pressure is being mounted on the government to annul the 15% VAT on electricity for residential consumers, according to several sources.

Several groups, including the Ghana Union of Traders Association (GUTA) and organised labour, have expressed their disapproval of the tax, indicating it will make their lives worse off.

The TUC has also stated its intention to lay down its tools and embark on a demonstration on February 13, 2024, should the government proceed with the tax.

Presently, although the tax has received both parliamentary and executive approval, it is yet to be implemented by ECG and NEDCO.

Last week, the Finance Ministry noted in a statement that although the relevant agencies have not yet implemented the tax, it wants to extensively engage with organised labour on it to convince them to agree.

“The Ministry of Finance has noted the concerns of organised labour on the implementation of VAT on consumption of electricity by residential customers. Extensive dialogue will be held with organised labour and other key stakeholders in the coming weeks to ensure stakeholder buy-in,” the Finance Ministry’s statement partly read.

The government, which has been looking to boost domestic revenues as part of the IMF programme, would have to explore other avenues to make up for the gap should the electricity tax be cancelled.