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VAT on electricity will worsen the plight of Ghanaians – Alan Kyerematen



Independent presidential aspirant and former Trade and Industry Minister, Alan Kwadwo Kyerematen, has condemned the government’s imposition of a new Value Added Tax (VAT) on electricity consumers beyond the lifeline threshold.

The founder of the Movement For Change in a post on social media platform X, said amidst the prevailing hardship Ghanaians are facing, it was not a good time for the government to burden the citizenry with new taxes.

“In the kind of economic situation we find ourselves, every government policy, plan or decision, has to have the objective of achieving the following; reduce the cost of living, reduce the cost of doing business, reduce exchange rate, and create sustainable jobs for the youth” the former minister said.

Putting VAT on electricity will not achieve any of the above. It would rather worsen the plight of the ordinary Ghanaian” Mr Kyerematen noted.

The former Trade and Industry Minister noted that his Great Transformational Plan (GTP), “as a trusted roadmap, would guide us to achieve the above objectives and more.”

Various groups and individuals have condemned the VAT on electricity, with the Trades Union Congress (TUC) issuing a seven-day ultimatum to the government to withdraw the tax.

The General Secretary of TUC, Dr. Yaw Baah stressed on the detrimental impact of this move on the livelihoods of ordinary Ghanaians, particularly pensioners and those with low incomes.

During a press conference on Tuesday, January 23, Dr. Baah emphasised that the impoverished population in the country cannot afford to bear the additional tax burden.

He called on the government and its agencies to promptly retract the implementation of the proposed tax.

“It’s always the poor people in this country, including pensioners, who bear the brunt. And we should not allow that to continue. Organised Labour, we have come together and our message to the government is very simple, we cannot pay VAT on electricity.

“We will not pay it today or tomorrow. Organised Labour is demanding the immediate withdrawal of the letter, and another directive from the Finance Minister to Ghana Grid Company (GRIDCo), ECG to stop the implementation of the VAT on electricity. We are giving the government, up to January 31, 2024, to withdraw the letter,” Dr Yaw Baah said.

He emphasised that they would take the necessary action if the Finance Minister does not instruct GRIDCo and ECG to retract the letter.

“If by that time the Minister of Finance fails to give directive to GRIDCO and ECG, we will advise ourselves,” he said.

In a letter dated January 1, Finance Minister Ken Ofori-Atta instructed the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to implement the VAT, with the goal of generating revenue for the COVID-19 recovery programme.

The government has outlined the rationale for the imposition of a 15 percent VAT on electricity consumption.

This measure is part of the government’s COVID-19 recovery programme, aiming to generate additional revenue.

A Deputy Energy Minister, Agyapa Mercer in a media interview on Monday, January 15, emphasised that while it was a challenging decision, it is necessary to settle debts owed to independent power producers.

“Obviously, if you look at the scope of the tax and what it is intended to do—raise revenue to meet some obligations of the government in the energy sector—it will interest you to know that, as we speak, as of July 2023, the amount of money that we owe to the IPPs alone is in the region of GH¢1.7 billion.

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