VAT on electricity is effectively a 22% increase in tariff undercover – Bright Simons

Bright Simons, a vice president of IMANI Africa, has reacted to a Ministry of Finance letter which showed the sector’s minister, Ken Ofori-Atta, ordering the implementation of 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 added that VAT forms part of the implementation of the country’s Covid-29 recovery programme and should be charged starting from January 1, 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 Section 35 and 37 and the First Schedule (9) of Act 870,” the letter clarified.

Reacting to this in a post shared on X, on Wednesday, January 10, 2024, Bright Simons indicated that the government was hiding behind the VAT to increase electricity tariffs.

He added that the VAT on electricity consumers means that tariffs have increased between 15 and 22 percent.

“This is effectively a 15% (up to 22% for commercial users?) undercover electricity price increase for most consumers in Ghana, no?” Simons wrote.

View the post below:

This is effectively a 15% (up to 22% for commercial users?) undercover electricity price increase for most consumers in Ghana, no? pic.twitter.com/frPYYDjzax

— Bright Simons (@BBSimons) January 10, 2024

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