Renowned economist and former Board Chair of the Ghana Revenue Authority (GRA), Prof. Stephen Adei, is vehemently opposing the recently implemented Value Added Tax (VAT) on electricity consumption, asserting that it will exacerbate the challenges faced by consumers and hinder the competitiveness of businesses.
Prof. Adei’s critique comes in response to a government directive instructing the GRA to collaborate with the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to apply VAT to consumers exceeding their lifeline power consumption, effective January 1, 2024.
Expressing his concerns on the Joy News channel’s program “Upfront,” Prof. Adei argued that the government’s decision is counterproductive and will adversely impact the country’s already fragile economy.
“There’s no doubt at all people will be worse off. You should first focus on things that increase production, and then that, in turn, will contribute to your taxes. Rather than targeting ordinary producers and consumers of electricity, the government should address issues like the billions in uncollected property taxes and numerous exemptions, especially those given to significant entities like mines,” he emphasized.
Meanwhile, the Africa Centre for Energy Policy (ACEP) has reignited discussions about privatizing ECG to enhance the government’s regulatory control over the power distributor. This renewed debate follows concerns about potential widespread power cuts due to the shutdown of several power plants resulting from the closure of the West African Gas pipeline in Takoradi.
Ben Boakye, the Executive Director of ACEP, pointed out that the lack of payment by many consumers for the power they consume is attributed to ECG being under state control, highlighting the need for effective regulation through privatization.