The government has decided to cancel the 15% Value Added Tax (VAT) on residential electricity.
According to reports, this decision comes after a cabinet meeting on Friday, February 2, 2024.
Finance Minister Ken Ofori-Atta had stated that any electricity consumption above lifeline units would attract a 15% value-added levy.
The government proposed the imposition of the tax as a measure to raise revenue to clear the energy sector debt in an effort to strengthen the sector.
Despite receiving initial approval from the Cabinet and Parliament, the proposal met strong opposition from Ghanaians, particularly organised labour.
General Secretary of TUC, Dr Anthony Yaw Baah, at a press conference in Accra on February 2, 2024, further directed all unions to be clad in red from Monday, February 5, 2024, to create awareness of their major demonstration beginning February 13.
TUC explained that the VAT was detrimental to the livelihood of ordinary Ghanaians.
Meanwhile, the government is set to engage the International Monetary Fund(IMF) in areas of expenditure to be restructured within the existing budget to ensure that scrapping the tax will not result in a huge revenue shortfall that will throw the budget off balance.
While the final decision on the policy remains uncertain, insiders suggest that it could either be entirely discarded or significantly reduced after consultations with the IMF.