Accra, Ghana//-Economist and former Board Chair of the Ghana Revenue Authority (GRA), Prof. Stephen Adei, is kicking against the newly introduced VAT on electricity consumption.
He insists it will worsen the plight of consumers and make businesses uncompetitive.
His comments come on the back of a government directive to the GRA to liaise with the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to transfer Value Added Tax (VAT) generated from consumers who have exceeded their lifeline power consumption effective January 1, 2024.
Reacting to the directive on Upfront on the Joy News channel, Prof. Adei stated that the government’s action is counterproductive and would hurt the country’s already battered economy.
“There’s no doubt at all people will be worse off. You’ll first focus on things that increase production and then that in turn will feed into your taxes. You should be going after the billions of uncollected property taxes and people getting away [inaudible], being exempted, not even the more important ones.
“The mines have millions of exemptions and these are the ones we should go after rather than going after the ordinary producer and consumer when it comes to electricity.”
Meanwhile, the Africa Centre for Energy Policy has reignited the debate for the privatisation of ECG to enable the government to regulate power distribution effectively.
This follows concerns of massive power cuts in the coming days as many power plants have been shut down due to the closure of the West African Gas pipeline in Takoradi.
The Executive Director of ACEP, Ben Boakye said many consumers are not paying for the power they’re consuming because ECG is state-controlled.
Timing for VAT introduction on electricity wrong
Energy expert, Kwadwo Nsafoah Poku has bemoaned government’s timing in introducing Value Added Tax (VAT) on electricity.
His regret follows government’s instruction to the Ghana Revenue Authority (GRA) to collaborate with the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to implement VAT on households that exceed the lifeline power consumption.
Finance Minister Ken Ofori-Atta’s directive, effective January 1, 2024, aims to transfer VAT generated from consumers surpassing the specified maximum consumption level for lifeline units.
In an interview on Joy FM’s Top Story on Wednesday, Mr Poku expressed the view that while taxes may be necessary to address the energy crisis, imposing them all at the beginning of the year, especially alongside various other taxes, is not ideal.
“I think the timing is wrong. It is a wrong time to introduce more VAT on electricity at this stage,” he said.
According to the energy expert, in as much as there is the cry for more money to be raised to fix the Electricity Company of Ghana and the energy sector, the implementation date should be reconsidered.
He believes there is a need for sensitisation around the VAT introduction on electricity, adding that there is a need to update ECG’s software.
Myjoyonline
