Cabinet cancels 15% VAT on electricity following widespread agitation

Cabinet has reportedly decided to withdraw the controversial 15% Value Added Tax (VAT) on electricity at a meeting held on Friday, February 2, 2024.

The government's reversal comes in response to agitation by organized labour and Ghanaians who lament that the implementation of the tax would impose further hardship on the already suffering citizenry.

The government has also agreed to initiate a conversation with the International Monetary Fund (IMF) to reach a consensus on how it can make up for the revenue shortfall occasioned by the decision to drop the VAT on electricity policy through additional spending cuts, reports asaaseradio.com.

It remains to be seen what options are available to the government after the reported withdrawal of the nuisance tax. The current position is that the 15% VAT on electricity is off, and it is likely it could either be completely removed or significantly reduced, the news portal added.

The Trades Union Congress held a meeting on Friday, February 2, after which it resolved that all workers would start wearing red from Monday, February 5, 2024, to herald a massive protest on Tuesday, February 13, to press home their demand for a total withdrawal of the 15% VAT on electricity consumption.

All members of organized labour groupings in both the public and private sector are to wear red bands at work from Monday, February 5, 2024, to Monday, February 12, 2024, the statement from organized labour said. Directives on the route of the demonstrations and all other communications will be duly communicated by the leadership of organized labour. Organized labor groups are expected to communicate in writing to their employers on the actions to be taken. If the directive on the VAT is not withdrawn after the demonstration, organized labor will meet and take a decision on when to initiate a nationwide strike again, the TUC said in a statement.

Organized labour has resolved that the withdrawal of the tax is non-negotiable, and the only thing that would avert imminent turbulence would be a directive from the government to the Electricity Company of Ghana (ECG) and Northern Electricity Distribution Company (NEDCo) cancelling the tax.

Read Full Story