The government has introduced a new 15 percent value-added tax (VAT) on electricity consumption. The VAT is part of the government’s COVID-19 recovery program and is intended to generate more revenue.
In a letter dated January 1, Finance Minister, Ken Ofori-Atta instructed the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to apply the VAT to residential customers who exceed the maximum consumption level for lifeline units.
Deputy Energy Minister, Andrew Agyapa Mercer, stated that the decision to impose the VAT on consumers was a difficult one, but necessary to settle debts owed to independent power producers.
The government owes an estimated GH¢1.7 billion to the IPPs alone, as of July 2023.
However, many people, including Joe Jackson, the Director of Business Operations at Dalex Finance, and Kofi Kapito, the Chief Executive Officer (CEO) of the Consumer Protection Agency, have criticized the government’s decision to impose the VAT on consumers. They describe it as harsh and ridiculous.
