Government withdraws VAT on electricity
The government has withdrawn the implementation of the 15 per cent Value Added Tax (VAT) on electricity tariffs for residential consumers above the lifeline.
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The Ministry of Finance wrote to the Electricity Company of Ghana Ltd (ECG) and the Northern Electricity Distribution Company (NEDCo) on December 12, last year to implement the tax policy.
A statement issued by the MoF last night said the ministry had informed the two utility companies to suspend the implementation of the VAT directive pending further engagements with key stakeholders, including organised labour.
The ministry said it expected that the engagements would bring innovative, robust and inclusive approaches to bridge the existing fiscal gap while bolstering economic resilience.
Since the letter to the ECG and NEDCo leaked about a month ago, some stakeholders in the country expressed their reservations and called for an immediate withdrawal.
Led by organised labour, they first gave a one-week ultimatum to the government to cease the implementation.
The ultimatum elapsed last week and labour had subsequently decided to embark on an industrial action on Tuesday, February 13, this year.
Several bodies including the Consumer Protection Agency, SEND Ghana, the Ghana Union of Traders Association (GUTA) and student unions had all added their voices for the tax to be withdrawn.
The VAT on electricity is one of the tax measures the government has spelt out in the 2024 Budget to meet its revenue target.