In a meeting held on Friday, February 2, 2024, the cabinet unanimously decided to revoke the previously endorsed policy of implementing a 15% value-added tax (VAT) on electricity.
This decision relieves consumers of electricity from the burden of paying the controversial VAT on their utility bills.
To compensate for the resulting revenue deficit due to the abandonment of the VAT on electricity policy, the government is set to initiate discussions with the International Monetary Fund (IMF). They aim to find a mutually agreeable solution, potentially through additional spending reductions.
Despite the prior approval of the proposal by both cabinet and Parliament, the strong opposition from the Trades Union Congress (TUC) and other stakeholders has prompted a significant reconsideration, ultimately leading to a reversal in policy.
The TUC, along with other organized labor groups, had threatened to stage a nationwide protest on Tuesday, February 13, in an effort to compel the government to rescind the directive to the Electricity Company of Ghana (ECG) and Northern Electricity Distribution Company (NEDCo) to implement the 15% VAT levy on residential electricity consumption.
In addition, the New Patriotic Party had also expressed their objections to the tax, further bolstering the opposition against it.
Source: Ngamegbulam Chidozie Stephen
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