We will not pay VAT on electricity today or tomorrow – Organised Labour 'threatens' government

The Trades Union Congress (TUC) has threatened to take action over the imposition of Value Added Tax (VAT) on electricity consumption by the Nana Addo Dankwa Akufo-Addo government.

Speaking at a press conference in Accra on Tuesday, January 23, 2024, the secretary-general of TUC, Dr Anthony Yaw Baah, said that it would not accept the VAT on electricity because ordinary Ghanaians are already suffering from the numerous taxes that have already been implemented by the government.

It gave the Minister of Finance, Ken Ofori-Atta, up to Wednesday, January 23, 2024, to rescind his order for the implementation of the VAT or face the full force of organised labour.

“It is always the poor including pensioners who bear the brunt and we should not allow that to continue. Today organized labour, our message to the government is that we cannot pay VAT on electricity, we will not pay it today, we will not pay it tomorrow.

“Organized labour is therefore demanding the directive from the Minister of Finance to stop the VAT on the consumption of electricity. So, we are giving the government up to 31st January 2024 to withdraw the letter. If by that time the directive has not been given to withdraw it, we will advise ourselves,” Dr Yaw Baah said.

Background:

The Akufo-Addo government came under intense scrutiny after 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 since the beginning of January 2024.

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.

BAI/OGB

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