In response to mounting public pressure and widespread concerns over its impact, the government of Ghana has officially suspended the planned implementation of a 15 percent Value Added Tax (VAT) on domestic electricity consumption.
The decision, communicated via a press statement issued by the Ministry of Finance on Wednesday, February 7, directs both the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to cease charging VAT on electricity consumption.
“The Ministry would like to inform ECG and NEDCO to suspend the implementation of the VAT directive pending further engagements with key stakeholders including organized labor,” the statement read.
The move comes in the wake of intense criticism from various interest groups, who have labeled the VAT imposition as punitive and poorly conceived. Organized labor had even planned a nationwide demonstration on February 13, 2024, demanding the withdrawal of the directive.
Earlier reports had indicated that the government was considering discussions with the International Monetary Fund (IMF) to address anticipated revenue shortfalls and potentially suspend the VAT on electricity.
“The Ministry expects that these engagements will birth innovative, robust, and inclusive approaches to bridging the existing fiscal gap while bolstering economic resilience,” the Ministry’s release concluded.
