Prof. Adei condemns government’s decision to impose VAT on power consumption

Prof. Emeritus Stephen Adei, a renowned Ghanaian economist and former Board Chair of the Ghana Revenue Authority (GRA) has criticized the government’s stance on the introduction of a new Value-Added Tax(VAT) on electricity consumption.

According to him, the newly introduced tax will worsen the plight of consumers and make businesses uncompetitive due to the current economic status of the nation.

Prof. Adei’s comment follows a government directive to the GRA to liaise with the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to transfer VAT generated from consumers who have exceeded their lifeline power consumption effective January 1, 2024.

Reacting to the directive, Prof. Adei stated that the government’s action is counterproductive and would affect many people, especially business owners.

“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,” he said in an interview on Joy News monitored by The Ghana Report.

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.

Since the beginning of the year, there have been power outages in most parts of the country.

However, the Deputy Energy Minister, Andrew Egyapa Mercer, has noted that the power cuts experienced in recent times have been resolved.

He assured that Ghanaians would experience constant power supply in their various homes and businesses from today, Thursday, January 11, 2024.