The Trades Union Congress (TUC) in Ghana has issued a stern ultimatum to the government, demanding the immediate withdrawal of the imposition of Value Added Tax (VAT) on electricity consumption beyond the lifeline threshold. The General Secretary of TUC, Dr. Yaw Baah, has stressed the detrimental impact of this move on the livelihoods of ordinary Ghanaians, particularly pensioners and those with low incomes.
During a recent press conference, Dr. Baah highlighted the heavy burden that the impoverished population in the country would bear due to the additional tax. He made a compelling case for the government and its agencies to promptly retract the implementation of the proposed tax, asserting that it is the underprivileged citizens who would suffer the most.
Dr. Baah voiced concerns of the Organized Labour, stating, “It’s always the poor people in this country, including pensioners, who bear the brunt. And we should not allow that to continue. Organized Labour, we have come together, and our message to the government is very simple: we cannot pay VAT on electricity.”
“We will not pay it today or tomorrow. Organized Labour is demanding the immediate withdrawal of the letter and another directive from the Finance Minister to Ghana Grid Company (GRIDCo), ECG, to stop the implementation of VAT on electricity. We are giving the government up to January 31, 2024, to withdraw the letter,” he firmly stated.
Dr. Baah made it clear that if the Finance Minister does not instruct GRIDCo and ECG to retract the letter by the specified date, they will take necessary action. “If by that time the Minister of Finance fails to give a directive to GRIDCO and ECG, we will advise ourselves,” he warned.
The controversy stems from a letter dated January 1, issued by Finance Minister Ken Ofori-Atta, instructing the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to implement the VAT. The objective behind this move is to generate revenue for the COVID-19 recovery programme.
The government has articulated the rationale for imposing a 15 percent VAT on electricity consumption. This measure is an integral part of the government’s COVID-19 recovery programme, designed to generate additional revenue.
Deputy Energy Minister Agyapa Mercer, while acknowledging the challenge posed by this decision, underscored its necessity in settling debts owed to independent power producers. He revealed that the government owes IPPs approximately GH¢1.7 billion as of July 2023.
The TUC’s ultimatum has intensified the debate surrounding this taxation issue, putting pressure on the government to reconsider its stance in light of the impact on ordinary citizens and pensioners. As the deadline approaches, the nation watches closely to see how the government responds to this call for action.
