Ghana: New electricity tax temporarily suspended following public uproar
Main Power Plant Energy ideas And energy saving
In a sudden U-turn, the Ghanaian government has suspended a 15% tax on power due to public outcry that it will exacerbate the country’s already dire cost-of-living situation.
Value-added tax, or VAT, was to be applied to home electricity users.
However, labour groups declared they would stage nationwide demonstrations against the new tax the following week.
According to authorities, the idea has now been shelved until negotiations to settle the disagreement are held.
The introduction of the tax is coming barely a week after the President Nana-Akuffo Ado-led administration introduced a fuel emissions levy. The levy is paid annually for the carbon emissions produced by their petrol or diesel-powered vehicles.
The finance ministry directed the two main power distributors – Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) – in a statement to temporarily suspend the move.
The statement stressed that it would pave the way for “extensive dialogue and also to get the buy-in of industry players and labour unions, following the grave concerns raised about its impact on consumers and businesses,” the statement said.
“On behalf of the government, the ministry would like to inform ECG and NEDCO to suspend the implementation of the VAT directive pending further engagements with key stakeholders including organized labour,” it added.
Meanwhile, trade unions argue that raising taxes will strain families and businesses, increasing the already expensive cost of doing business.
Ghana has been struggling with its biggest economic crisis in a decade, which came amid soaring public debt-servicing costs.
In 2023, the oil, cocoa, and gold producers secured a bailout program with the International Monetary Fund (IMF) worth $3 billion as part of efforts to ease the raging economic troubles.
The forthcoming presidential election in Ghana is expected to be a tight race as candidates are expected to campaign along socio-economic lines to drive support ahead of the poll by the end of 2024..
