High utilities and taxes could jeopardise the country’s economic stabilisation, government’s 24-hour economy initiative for jobs and industrialisation agenda, the Ghana Union of Traders Association (GUTA) has cautioned. 

This comes on the back of a recent announcement of a 14.75 per cent increase in electricity tariff, effective May 3, 2025, and the Government’s indication of adding the COVID-19 levy to Value Added Tax (VAT) in a rationalisation exercise. 

“Fortunately, the economic indicators are getting right,” Dr Joseph Obeng, the President of GUTA, said in an exclusive interview with the Ghana News Agency, cautioning against actions that could derail the gains. 

“We do not have to negate it with any unwanted costs of doing business, regarding utility tariff increment and high Value Added Tax (VAT). Because if care is not taken, we will shoot ourselves in the foot,” he said. 

“The 14.75 per cent increase in electricity tariff is so huge and unjustified, given the improvement in economic indicators that were cited as reasons for previous increases,” Dr. Obeng said.  

GUTA has been pushing for a broad restructuring of the current VAT system to ensure uniformity, simplicity, affordability, leading to greater compliance and generating more revenue for the Government.  

The current VAT system comprised a standard rate of 15 per cent, with an additional 2.5 per cent National Health Insurance Levy (NHIL), 2.5 per cent Ghana Education Trust Fund (GETFund) Levy, and a one per cent COVID-19 Levy. 

In essence, businesses under the standard VAT scheme incurred a rate of 21 per cent, while small businesses with an annual turnover below GHS500,000 paid three per cent VAT under the Flat Rate Scheme (VFRS). 

To alleviate hardships and ease the high cost of doing business, the Government pledged to scrap some tax handles, including Electronic Transfer Levy (E-levy), Emissions Levy and 10 per cent levy on bet winnings, and COVID-19 levy. 

So far, the E-levy, Emissions Levy and the Betting Tax have all been scrapped, but President Mahama has indicated that the COVID-19 levy would be addressed in a VAT rationalisation exercise in September 2025. 

Dr Obeng advocated that the Government took bold steps to halt further increases in utilities, VAT and port charges to create a safe space for enhanced local production at affordable prices. 

He urged the Government to purge the Electricity Company of Ghana (ECG) of inefficiencies and alleged corrupt practices, citing the missing containers of cables and other essential materials of the company as example. 

The International Monetary Fund (IMF) has identified arrears by ECG to Independent Power Producers and other power sector players as a major concern in the implementation of the country’s US$3 billion loan-supported programme. 

“Arrears are continuing to accumulate, which is a very significant challenge for Ghana, given the implications it can have for power supply,” said Stéphane Roudet, the IMF Mission Chief for Ghana. 

He, however, noted that the Fund had seen a promising reform that could make ECG more efficient at collecting its bills and reducing the large commercial losses of the company. 

He said this during a media roundtable at the April 2025 IMF/World Bank Group Spring meetings in Washington DC, USA, expressing confidence in the country’s economic stability.