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In a unanimous decision during a Cabinet meeting on February 2, 2024, the government has opted to retract the previously approved 15% Value Added Tax (VAT) on electricity. This move, reported by Asaase Radio, eliminates the obligation for electricity consumers to pay the controversial VAT on their utility bills.
The decision comes in response to widespread criticism from entities such as the Trade Union Congress (TUC), despite the initial approval by both the Cabinet and Parliament. Acknowledging the negative reception, the government is now set to reevaluate its position and engage in discussions with the International Monetary Fund (IMF) to address the anticipated revenue shortfall resulting from the abandonment of the VAT on electricity policy. This may involve potential additional spending cuts.
Sources familiar with the Cabinet decision suggest that the final stance on the policy, whether it will be entirely scrapped or significantly reduced, will become clearer after discussions with the IMF. Asaase News reported, “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.”
In response to the initially proposed 15% VAT on residential electricity consumption by ECG and NEDCO, Organised Labour held a meeting on February 2, 2024. They have decided to stage a nationwide demonstration on Tuesday, February 13, 2024, urging the government to withdraw the directive.
To prepare for the demonstration, Organised Labour has communicated its intentions to the Inspector General of Police and all 16 regional commands. Members in both 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 states that leadership will convey details regarding the demonstration route and other communications.
Should the directive on the VAT not be withdrawn post-demonstration, Organised Labour reserves the right to convene and decide on the initiation of a nationwide strike.
