The government’s 15 percent VAT on power use is supported by evidence.
The government has directed the application of a value-added tax (VAT) on energy as one of the steps taken in an effort to increase income as part of its COVID-19 recovery programme.
The Northern Electricity Distribution Company (NEDCO) and the Electricity Company of Ghana (ECG) were directed by Finance Minister Ken Ofori-Atta to impose the Value Added Tax (VAT) on residential customers who above the maximum usage threshold for lifeline units, in a letter dated January 1.
Although it was a tough choice for the government, deputy energy minister Andrew Agyapa Mercer claims it was required to pay off debts owing 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.”
People, including the Director of Business Operations at Dalex Finance, Joe Jackson, criticised the government’s decision to impose the VAT on consumers, describing it as harsh.
Kofi Kapito, the Chief Executive Officer (CEO) of the Consumer Protection Agency, also described it as ridiculous.
