Editorial of the Daily Searchlight of 5th February, 2024
The Trade Union Congress (TUC) is up in arms and is preparing to call for labour unrests across the country in the face of the government’s avowed intent to go ahead with levying value added tax (VAT) on electricity. So far, reports peg the expected rate at 15%.
The ultimatum is a response to a letter dated January 1 2024, where the Finance Minister, Mr Ken Ofori Atta directed the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to start the charging VAT for residential customers of electricity above the maximum consumption of level specified for block charges for lifeline units, aiming to raise revenue for COVID-19 recovery program
Speaking at a press conference in Accra, Dr Anthony Yaw Baah, the Secretary General of TUC, strongly opposed the move, saying it would worsen the plight of ordinary Ghanaians especially pensioners and low-income earners.
He indicated that “It is always the poor people in this country, including pensioners, who bear the brunt. And we should not allow that to continue. Organised Labour, we have come together and our message to the government is very simple, we cannot pay VAT on electricity; we will not pay it today; we will not pay it tomorrow.”
The Daily Searchlight says;
Politically, the moniker “VAT” should be a name that imposes shivers down the spine of politicians. The name connotes a deadly history in Ghana.
It should also have a unique vintage particularly those that are in power today. The current President, Nana Addo Dankwa Akufo Addo, was a key part of a series of demonstrations opposing the imposition and levying of VAT on consumer products in 1995, in which there were deaths.
In sum, the Daily Searchlight says that politically, any decision to introduce VAT, should not be taken lightly.
Economically, it is also not a decision to arrive at lightly. Ghana is a country that is suffering from a high degree of unemployment. This is because private industry has traditionally not done very well. Private industry has consistently suffered from a high degree of over-regulation, lack of access to capital and funds, poor markets and mainly, from over-taxation. For private industry, additional VAT means an even stricter milieu, hence more unemployment.
Socially, introducing VAT on domestic consumers, is also not a decision to arrive at lightly. Already, people are suffering under the pinch of very high electricity prices, and imposing the VAT would only make the existing situation worse.
Given all these factors, we at the Daily Searchlight are of the sincere belief that the government would be wise to rethink the decision to impose this tax. It does not portend good omens, particularly of the political kind, and would surely lead to backlash, on many fronts.
