Govt drops VAT on electricity, set to engage IMF on revenue shortfall
Reports suggest that the government has opted to cancel the imposition of the 15% Value Added Tax (VAT) on electricity.
This decision, which relieves consumers from the new tax on electricity bills, is said to have been borne out of a cabinet meeting on February 2, 2024.
The New Patriotic Party also posted on its official handle on X [formerly Twitter] that the tax had been dropped.
Sources disclosed that the government’s choice to drop the VAT on electricity is in response to strong opposition from the Trade Unions Congress (TUC) and other stakeholders.
Despite receiving initial approval from both Cabinet and Parliament, the widespread dissent has prompted a reassessment of the policy.
The government is now set to engage in discussions with the International Monetary Fund (IMF) to find a consensus on compensatory measures for the anticipated revenue shortfall resulting from the decision to scrap the VAT on electricity.
While the final decision on the policy remains uncertain, insiders suggest that it could either be entirely discarded or significantly reduced after consultations 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,” reported Asaase News.
Organized Labour had planned a nationwide demonstration on February 13, 2024, urging the government to withdraw the directive to implement the 15% VAT on residential electricity consumption.
The labour groups have also announced their intent to wear red bands at work from February 5 to February 13 and have hinted at the possibility of a nationwide strike if the VAT directive is not withdrawn after the demonstration.