Professor Stephen Adei, an economist and former Board Chair of the Ghana Revenue Authority (GRA), is raising objections to the recently introduced Value Added Tax (VAT) on electricity consumption.
He argues that this move will exacerbate the challenges faced by consumers and negatively impact the competitiveness of businesses.
The government recently instructed the GRA to collaborate with the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to implement VAT on consumers exceeding their lifeline power consumption, effective January 1, 2024.
Expressing his concerns on the Joy News channel’s “Upfront,” Prof. Adei criticized the government’s decision, deeming it counterproductive and detrimental to the country’s already fragile economy.
He emphasized the need to focus on initiatives that boost production and increase tax revenues, suggesting that uncollected property taxes and exemptions granted to entities like mines should be prioritized over taxing ordinary consumers for electricity.
Simultaneously, the Africa Centre for Energy Policy (ACEP) has reignited the debate on privatizing ECG to enhance effective regulation by the government.
This resurgence of the privatization discussion comes amid worries about potential widespread power cuts due to the closure of the West African Gas pipeline in Takoradi, leading to the shutdown of several power plants.
ACEP’s Executive Director, Ben Boakye, argued that ECG, being state-controlled, faces challenges in ensuring that consumers pay for the power they consume.