The Consumer Protection Agency (CPA) has warned the government to withdraw its decision to impose a 15 percent value-added tax (VAT) on electricity or face a massive protest from civil society groups. The CPA said that the VAT on electricity will harm consumers, especially the poor and vulnerable, who are already finding it difficult to pay their bills.
The CPA made this statement at a press conference held in Accra on Tuesday, where its CEO, Kofi Kapito, accused the government of being insensitive to the suffering of Ghanaians, who are grappling with high inflation, unemployment, and economic hardship.
He said that the VAT on electricity will raise the cost of living and production, and affect the competitiveness of businesses and industries.
“We want the government to rescind its decision or face the anger of Ghanaians,” he said.
The VAT on electricity was announced by the Finance Minister, Ken Ofori-Atta, in a letter dated January 1, 2024, to the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO). The letter instructed them to apply the 15 percent VAT to residential customers who consume more than the lifeline units. The lifeline units are the minimum amount of electricity that is subsidized by the government for low-income consumers.
The VAT on electricity has been met with strong opposition from various stakeholders, including the Trades Union Congress, who have called for its withdrawal. The CPA is the latest to join the chorus of dissent and has vowed to join forces with other civil society groups to protest against the tax if the government does not heed their call.
However, the Deputy Energy Minister, Andrew Agyapa Mercer, has defended the VAT on electricity, saying that it is necessary to clear off debts owed to independent power producers in the power sector. He said that the VAT on electricity will help to improve the efficiency and reliability of the power supply in the country.
Source: Kofi Otuo Bekoe
