This is unfair and disastrous - Consumer Protection Agency on 15% VAT on electricity

The Consumer Protection Agency (CPA) has described government's decision to introduce a 15% Value Added Tax (VAT) on electricity as unfair and disastrous.

Chief Executive Officer for CPA, Kofi Kapito, in a press release opined that consumers of electricity were overburdened, therefore, the implementation of the tax measure will cause more harm than good to consumers.

Mr Kapito stated that the Public Utilities Regulatory Commission (PURC) will in the first quarter increase utility services despite the hike in VAT if rolled out.

“At this particular point in time, consumers of electricity are already overburdened, and it will be unfair and disastrous on all electricity consumers, most especially households who do not add any value to electricity before using it,” part of the statement read.

“Government should not forget that PURC, the regulator, will definitely implement the automatic price adjustment on utility services in this first quarter, so any additional cost from the government will be a double jeopardy on consumers,” it added.

The Consumer Protection Agency has called on government to withdraw the levy before Wednesday, January 31, 2024.

Government, through the Minister of Finance, Ken Ofori-Atta directed the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) in a letter to implement a 15% VAT on electricity consumption effective January 1, 2024.

He explained that the tax aimed to raise revenue for the COVID-19 recovery programme.

The letter said the VAT will apply to residential electricity customers above the maximum consumption level specified for block charges for lifeline units.

The implementation of VAT for residential customers of electricity is in line with Sections 35 and 37 and the First Schedule (9) of the Value Added Tax (VAT) Act, 2013 (ACT 870).

SA/NOQ

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