Within seven days, the Trade Union Congress (TUC) has requested that the value-added tax (VAT) on electricity for residential customers be removed from the government.
That being said, it is stated that “The government has precisely until January 31, 2024, to withdraw the letter.” If, at that time, the Minister of Finance has not directed the Northern Electricity Distribution Company (NEDCO) and the Electricity Company of Ghana (ECG) to stop imposing VAT on residential customers, we will counsel ourselves.
At a press conference on the imposition of VAT on residential customers yesterday in Accra, TUC General Secretary Dr. Yaw Baah made this statement.
“Our message to the government is very simple: we cannot pay VAT on electricity; we will not pay it today, and we will not pay it tomorrow,” stated the general secretary.
According to him, the TUC discovered a circular from the Ministry of Finance, dated December 12, 2023, and signed by the sector minister, Ken Ofori Atta, ordering the two major distribution companies, NEDCO and ECG, to begin, with effect from January 1, 2024, the “implementation of VAT for residential customers of electricity above the maximum consumption level specified for block charges for lifeline units in line with Section 35 and 37 and first schedule (9) of the VAT Act, 2013, (Act 870).”
The General Secretary announced a 15% increase in electricity costs for residential customers of ECG and NEDCO, with 15% VAT for those above 30 kilowatts per hour.
According to Dr. Baah, “It is noteworthy at all and likewise that the lifeline customers were only able to use three LED bulbs, one electricity iron, one television, and one fan with 30 kilowatt hours of electricity.”
He stated that labor unions were calling for the immediate retraction of the letter and another directive from the Minister of Finance to ECG and NEDCO to cease the imposition of the VAT on residential electricity customers. He pointed out that since 2022, electricity tariffs have increased by 73%.
He expressed regret over the government’s imposition of VAT on residential electricity users, pointing out that there were advanced plans to eliminate VAT for wealthy multinational mining companies conducting mineral exploration in Ghana.
It is anticipated that our natural resources will act as a cushion to protect the economy against shocks both internal and external, much like Ghana is going through right now. Sadly, though, such is not the situation in Ghana. The impoverished are always the ones that suffer the most. We must not permit that to continue,” he continued.
