The External Communications Manager with the Electricity Company Ghana (ECG), Laila Abubakari, has stated that there has been a lot of negative feedback from customers about the Value Added Tax (VAT) on electricity.

In an interview on Joy FM’s Top Story on Tuesday, January 23, she said customers are abhorred about the announcement of the VAT on some category of electricity consumers.

She, however, said ECG is yet to implement the directive.

Earlier, Madam Abubakari pointed out that ECG is engaged in discussions with the Ministry of Finance, the Ghana Revenue Authority, and other relevant stakeholders to comprehend the specifics of the tax implementation.

“It’s been a challenge because we interface with the customers daily. The [customers] first point of call is us. I try to let them understand that this is something that is coming from the Ministry of Finance and the Ghana Revenue Authority. Ours is to implement.

“It is unfortunate that we interface with them and have to hear their sentiments. The sentiments out there generally aren’t good because of the economic hardships that a lot of people are facing,” she stated.

According to her, it is unfortunate that ECG cannot do anything about these sentiments explaining that “ECG’s legal ammunition does not come in for us to advocate in any effective manner for the customer.”

She added that the Public Utilities Regulatory Commission (PURC) is mandated to advocate for the customer.

Read also: https://www.myjoyonline.com/you-have-7-days-to-revoke-vat-on-electricity-tuc-to-government/

Her comments follow the Trades Union Congress' (TUC) request to the government to withdraw the Value Added Tax on electricity consumption beyond the lifeline threshold, highlighting its negative impact on ordinary citizens.

Finance Minister, Ken Ofori-Atta in a letter dated January 1, 2024, instructed the ECG and the Northern Electricity Distribution Company (NEDCO) to implement the VAT on non-lifeline residential consumption, to generate revenue for the COVID-19 recovery programme.

The government has outlined the rationale for the imposition of a 15 percent VAT on electricity consumption. This measure is part of the government's COVID-19 recovery programme, aiming to generate additional revenue.

A Deputy Energy Minister, Agyapa Mercer in a media interview emphasised that while it was a challenging decision, it is necessary to settle debts owed to independent power producers.

“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."

However, the announcement has been met with opposition from the Minority and energy experts who have called on the government to repeal the VAT imposed on specific categories of residential electricity consumers.

Former President John Mahama joined in the calls, arguing that the move will only pile up the cost of electricity, which has already experienced some increases.

The latest to protest over the VAT is the Trade Unions. They have issued a 7-day ultimatum to the government to withdraw the tax.