After a Cabinet meeting on Friday, February 2, 2024, it has been unanimously decided to abandon the previously sanctioned policy of imposing a 15% Value Added Tax (VAT) on electricity.
This means that consumers of electricity will no longer be obligated to pay the contentious 15% VAT on top of their utility bills, according to Asaase Radio.
Following the negative reception of the proposed policy by entities such as the Trade Unions Congress (TUC), the government has opted to reassess its stance and reverse the decision. This is despite its prior approval by both the Cabinet and Parliament.
The government has also agreed to engage in discussions with the International Monetary Fund (IMF) to reach a consensus on compensating for the anticipated revenue shortfall resulting from the abandonment of the VAT on electricity policy. The resolution to address this deficit may involve additional spending cuts.
Regarding the final decision on the policy, sources familiar with the Cabinet decision suggest that clarity will emerge following engagements with the IMF. “The position currently is that the 15% VAT on electricity is off, and it is likely it could either be off totally or significantly slashed,” Asaase News reported.
Meanwhile, Organised Labour, in response to the directive for the implementation of the 15% VAT on residential electricity consumption by ECG and NEDCO, held a meeting on February 2, 2024. Subsequently, they decided to stage a nationwide demonstration on Tuesday, February 13, 2024, urging the government to withdraw the directive.
In preparation for the demonstration, Organised Labour has communicated their intentions to the Inspector General of Police and all 16 regional commands. Additionally, members of Organised Labour, both in the public and private sectors, are instructed to wear red bands at work from Monday, February 5, 2024, to Monday, February 12, 2024.
The communique from Organised Labour further stated that details regarding the demonstration route and other communications will be duly conveyed by the leadership. If the directive on the VAT is not withdrawn post-demonstration, Organised Labour reserves the right to convene and decide on the initiation of a nationwide strike.
