Minority Leader and MP for Ajumako-Enyan-Esiam constituency, Dr. Cassiel Ato Forson, has reacted to the newly introduced value-added tax (VAT) on residential customers who use more electricity than the allotted lifeline.
Earlier on it was reported that with effect from January 1, 2024, the government announced plans to impose Value Added Tax (VAT) on residential electricity consumption that surpasses certain lifeline levels.
This is a calculated move to increase revenue and comply with the PC-PEG, the Post-Covid-19 Programme for Economic Growth, which is supported by the International Monetary Fund (IMF).
The decision complies with Sections 35 and 37 of the Value Added Tax (VAT) Act, 2013 (ACT 870), as well as First Schedule (9) of the Medium-Term Revenue Strategy.
The exemption does not, however, apply to electricity provided to homes up to the maximum consumption level mentioned in the block charges for lifeline units.
In a statement, the government instructed the Ghana Revenue Authority (GRA) to work with the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to ensure the smooth implementation of VAT for residential customers who use more energy than the designated lifeline.
In a reaction, Dr. Ato Forson took to his X (formerly Twitter) page to disclosed that since 2013 governments have refrained from imposing VAT on domestic consumption of electricity because such implementation would increase the cost of electricity to domestic consumers without giving them the opportunity to reclaim their VAT.
“Since 2013, governments have refrained from imposing VAT on domestic consumption of electricity for very good reasons. Such an implementation was going to increase the cost of electricity to domestic consumers without giving them the opportunity to reclaim their VAT (because domestic consumers of electricity are not VAT registered),” he tweeted.
He slammed President Nana Akufo-Addo/Dr. Bawumia for increasing electricity tariff by 21.9 % in the middle of a new dumsor which the NPP government has refused to accept.
He cautioned Ghanaians to brace themselves for more hardships from President Akufo-Addo led government who promised to reduce electricity tariff.
“Brace up for more hardships from the government, which promised to reduce electricity tariffs but has ended up making us pay more for electricity,” he added.
Since 2013, governments have refrained from imposing VAT on domestic consumption of electricity for very good reasons.
Such an implementation was going to increase the cost of electricity to domestic consumers without giving them the opportunity to reclaim their VAT (because…
— Cassiel Ato Forson(PhD) (@Cassielforson) January 10, 2024
