In a surprising turn of events, Asaase News reports that the Ghanaian government, during a cabinet meeting on Friday, February 2, 2024, has decided to retract the earlier-approved policy of imposing a 15% value-added tax (VAT) on electricity. This decision comes in response to widespread public discontent, particularly from the Trades Union Congress (TUC), prompting the government to rethink its stance.
The move signifies a departure from the initially endorsed plan that required power consumers to pay an additional 15% VAT on their electricity bills. Despite receiving approval from both cabinet and Parliament, the government's reconsideration stems from the strong opposition it faced from the TUC and other concerned parties.
As part of the revised strategy, the government intends to engage in discussions with the International Monetary Fund (IMF) to explore alternative measures for compensating the anticipated revenue shortfall resulting from the abandonment of the VAT on electricity policy. Sources close to Asaase News suggest that while the current position leans towards completely scrapping the 15% VAT, the final decision will become clearer after consultations with the IMF.
In response to the initial policy, organised labour, led by the TUC, held a meeting on February 2 and decided to stage a nationwide demonstration on February 13. The demonstration aims to pressure the government into rescinding the directive to implement the 15% VAT charge on residential electricity consumption by the Electricity Company of Ghana (ECG) and Northern Electricity Distribution Company (NEDCo).
As a show of solidarity, the TUC has urged all members of organised labour groups in both the public and private sectors to wear red bands at work from February 5 to February 12. The organised labour groups have further communicated their intentions to employers, and if the directive on VAT is not withdrawn post-demonstration, the TUC states that it will convene to decide on initiating a nationwide strike.
