An independent presidential aspirant and former Minister of Trade and Industry, Alan Kwadwo Kyerematen, has criticized the government’s introduction of an additional Value Added Tax (VAT) on electricity users who exceed the lifeline threshold.
In a statement on the social media platform X, the founder of the Movement For Change expressed disapproval, arguing that given the current challenges faced by Ghanaians, imposing new taxes was untimely and added further burden to the citizens.
“In the kind of economic situation we find ourselves, every government policy, plan or decision, has to have the objective of achieving the following; reduce the cost of living, reduce the cost of doing business, reduce exchange rate, and create sustainable jobs for the youth” the former minister said.
Mr. Kyerematen emphasized that levying VAT on electricity would not contribute to any positive outcomes; instead, it would exacerbate the difficulties faced by the average Ghanaian.
The former Trade and Industry Minister noted that his Great Transformational Plan (GTP), “as a trusted roadmap, would guide us to achieve the above objectives and more.”
Various groups and individuals, including the Trades Union Congress (TUC), have strongly condemned the imposition of VAT on electricity. The TUC, through its General Secretary, Dr. Yaw Baah, issued a seven-day ultimatum to the government, demanding the withdrawal of the tax.
Dr. Baah underscored the detrimental impact of this decision on the livelihoods of ordinary Ghanaians, especially pensioners and those with low incomes.
During a press conference on Tuesday, January 23, he emphasized that the impoverished population in the country cannot afford to bear the additional tax burden. Dr. Baah called on the government and its agencies to promptly reverse the implementation of the proposed tax.
“It’s always the poor people in this country, including pensioners, who bear the brunt. And we should not allow that to continue. Organised 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. Organised 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 the VAT on electricity. We are giving the government, up to January 31, 2024, to withdraw the letter,” Dr Yaw Baah said.
He emphasised that they would take the necessary action if the Finance Minister does not instruct GRIDCo and ECG to retract the letter.
“If by that time the Minister of Finance fails to give directive to GRIDCO and ECG, we will advise ourselves,” he said.
In a letter dated January 1, Finance Minister Ken Ofori-Atta directed the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to implement a 15 percent VAT on electricity consumption. The objective behind this move is to generate revenue for the government’s COVID-19 recovery program.
The government has provided a rationale for the imposition of the VAT, citing it as a crucial component of their strategy to generate additional funds for the COVID-19 recovery initiative. Deputy Energy Minister Agyapa Mercer, in a media interview on Monday, January 15, acknowledged the difficulty of the decision but emphasized its necessity in settling debts owed to independent power producers.
“Obviously, if you look at the scope of the tax and what it is intended to do—raise revenue to meet some obligations of the government in the energy sector—it will interest you to know that, as we speak, as of July 2023, the amount of money that we owe to the IPPs alone is in the region of GH¢1.7 billion.
