Prof Adei criticises govt over imposition of VAT on electricity consumption

The former chairman of the National Development Planning Commission (NDPC), Prof Stephen Adei, has criticised the Nana Addo Dankwa Akufo-Addo government over its decision to introduce VAT on a section of electricity consumers in the country.

According to Prof Stephen Adei, the imposition of the VAT is counterproductive because it would certainly affect households and businesses which would then affect the government’s revenue mobilisation through taxes.

He said that the government should rather find creative ways of taxing sectors in the country that are under tax or not being taxed at all, myjoyoneline.com reports.

“There’s no doubt at all people will be worse off. You’ll first focus on things that increase production and then that in turn will feed into your taxes. You should be going after the billions of uncollected property taxes and people getting away [inaudible], being exempted, not even the more important ones.

“The mines have millions of exemptions and these are the ones we should go after rather than going after the ordinary producer and consumer when it comes to electricity,” Prof. Adei is quoted to have said.

A letter from the Ministry of Finance showed that the government has been changing Value Added Tax (VAT) on a section of electricity consumers in the country.

The letter, which was signed by the Minister for Finance, Ken Ofori-Atta, and addressed to the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO), indicated that the VAT would be for residential customers of electricity above the maximum consumption level specified for block charges for lifeline units.

It said that VAT forms part of the implementation of the country’s Covid-29 recovery programme and should be charged starting from January 1, 2024.

“As part of the implementation of the Government's Medium-Term Revenue Strategy and the IMF-Supported Post Covid-19 Programme for Economic Growth (PC-PEG), 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 the First Schedule (9) of Value Added Tax (VAT) Act, 2013 (ACT 870) has been scheduled for implementation, effective 1st January 2024.”

“For the avoidance of doubt, VAT is still exempt for "a supply to a dwelling of electricity up to a maximum consumption level specified for block charges for lifeline units" in line with Sections 35 and 37 and the First Schedule (9) of Act 870,” the letter further clarified.

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