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Electricity VAT: Government to dialogue with Organised Labour

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In the coming weeks, the government is set to engage in extensive dialogue with Organized Labour and other key stakeholders to garner support for the proposed 15 per cent Value Added Tax (VAT) on electricity. The decision to introduce VAT on electricity has sparked protests from various stakeholder groups, including labor unions, expressing their discontent with the policy that aims to tax electricity consumption by residential customers.

The Ministry of Finance issued a statement, appealing to Organized Labor and all stakeholders, including the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO), to exercise restraint and participate in constructive dialogue for a swift resolution of the concerns raised.

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The statement emphasized the government’s commitment to collaborating with stakeholders to sustain economic progress, achieve macroeconomic stability, and foster inclusive growth in the country. It acknowledged the positive strides made in implementing the Post-COVID-19 Programme for Economic Growth (PC-PEG), citing higher-than-programmed growth targets, reduced inflation, improved fiscal and external positions, a more stable exchange rate, and a declining Monetary Policy Rate.

The Ministry of Finance had, in a letter dated December 12, 2023, instructed ECG and NEDCO to apply VAT to residential customers exceeding the maximum consumption level for lifeline units starting in January. In response, Organized Labor, through the Trade Union Congress, issued a seven-day ultimatum on January 23, demanding the withdrawal of the policy and criticizing its timing as detrimental to the economic conditions of Ghanaians.

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