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In an effort to ease escalating tensions, the Ministry of Finance has issued an appeal to organized labor and key stakeholders, including the Electricity Company of Ghana (ECG) and Northern Electricity Distribution Company (NEDCo). The aim is to encourage restraint and foster constructive dialogue regarding the contentious implementation of value-added tax (VAT) on electricity for residential customers.
The deadlock originated from a Ministry of Finance directive dated December 12, 2023, instructing ECG and NEDCo to enforce VAT on electricity for residential customers. Responding to this, organized labor, represented by the Trades Union Congress (TUC), vehemently opposed the VAT implementation in a press statement on January 23, 2024.
Acknowledging the concerns raised by organized labor, the Ministry of Finance expressed its commitment to resolving the issue through extensive dialogue with key stakeholders in the coming weeks. The ministry’s plea for restraint underscores the urgency of finding a swift resolution to the impasse.
A representative from the ministry stated, “We believe that through open dialogue, we can address the concerns raised by organized labor and other stakeholders. Our goal is to achieve a resolution that is fair and takes into consideration the interests of all parties involved.”
Despite this, organized labor issued a stern one-week ultimatum, ending January 31, 2024, for the government to withdraw the VAT on electricity for residential customers. Dr. Yaw Baah, Secretary-General of the TUC, delivered a strong message warning of worker discontent if the government fails to act promptly.
Dr. Baah emphasized, “Our message to the government is very simple – we cannot pay VAT on electricity; we will not pay it today; we will not pay it tomorrow,” encapsulating the resolute stance of organized labor.
To support their argument, the TUC pointed out the dire implications of implementing the directive, foreseeing at least a 15 percent increase in electricity bills for residential customers. This comes after a significant 73 percent hike in electricity tariffs in 2022, adding to the financial burden on Ghanaians.
Expressing concern, Dr. Baah highlighted the apparent inconsistency in the government’s actions, noting the imposition of VAT on residential electricity consumers while plans were underway to remove VAT on mineral exploration, a move perceived as favorable to wealthy multinational mining companies.
In response, the Ministry of Finance provided context, indicating that the VAT on electricity is part of the government’s medium-term revenue strategy and aligned with the International Monetary Fund (IMF)-supported post-COVID-19 Programme for Economic Growth.
The government reiterated its commitment to working with all stakeholders to sustain progress made in implementing the post-COVID-19 Programme for Economic Growth (PC-PEG).
Source: Omanghana.com
