VAT On Electricity: Go After Mines, Focus On Property Rates Not Ordinary Citizens

Former Board Chair of the Ghana Revenue Authority (GRA), Prof Stephen Adei, has said, “There’s no doubt at all people will be worse off” when the government starts taxing them for power consumption.
The Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) have been requested by Minister of Finance Ken Ofori-Atta, to liaise with the Ghana Revenue Authority (GRA) “to ensure that the implementation of VAT for residential customers of electricity above the maximum consumption level specified for block charges for lifeline units takes effect on 1 January 2024.

This is in line with Sections 35 and 37 and the First Schedule (9) of Act 870, a statement from the ministry said on 12 December last year.

“By a copy of this letter, GRA is requested to ensure that it liaises with ECG and NEDCO for the transfer of the revenues collected from the implementation of VAT on the subject matter as part of its domestic VAT collections,” the statement noted.

Reacting to the development, Prof Adei said that the government has misdirected its tax policy.

“You’ll first focus on things that increase production and then that, in turn, will feed into your taxes”, the economist noted.

In his view, the government “should be going after the billions of uncollected property taxes” as well as all the exemptions given to some sectors such as mining.

“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”, he noted.