Ghana Tax Burden: Government Committed To Reviving 15% VAT On Electricity According To IMF Review

• An IMF report indicates that the government plans to reintroduce the VAT on residential electricity purchases
• The IMF said the government was waiting for a more conducive economic environment
• Organised labour was set to hold a nationwide protest against the tax on February 13, 2024

An IMF report indicates the government plans to reintroduce the controversial 15& VAT on residential electricity purchases.

In its report on the second review under the extended credit facility, the IMF said the government was waiting for a more conducive economic environment.

“The authorities are committed to implementing this measure when the inflation dynamics are more conducive.”

The report noted an expected yield of 0.17% of GDP from the tax. The report, released for July 2024, also indicated that the Ghana Revenue Authority is taking additional administrative measures to ensure that the revenue measures in the 2024 Budget deliver the expected yields

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According to the IMF, the government targeted Ghanaian residents' foreign income, large taxpayers' audits, and property tax collection to offset the losses.

The tax was suspended after organised labour threatened to protest the revenue measure.

Organised labour was set to hold a nationwide protest against the tax on February 13, 2024. The tax was to be charged to residential electricity customers above the lifeline.

A number of tax policies emerged in the wake of countries' bailout by the IMF. Recently, plastic manufacturers challenged the new 5% tax on locally produced plastics.

The IMF said Ghana's economic reform program is delivering on its objectives. Despite some delays, it said good progress has also been made on the key structural reform milestones.

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Bawumia's pledge to remove taxes

YEN.com.gh reported that Vice President Mahamudu Bawumia promised to abolish the e-levy and other taxes burdening Ghanaians.

The Electronic Transfer Levy Act imposed a levy of 1% on electronic transfers like mobile money transactions.

Bawumia also announced that he will abolish the emission levy, tax on betting, and the proposed 15% VAT on electricity tariffs if it exists by January 2025.

He was speaking at a stakeholder interaction with members of the Ghana National Chamber of Commerce and Industry in Accra on March 21.

Proofread by Edwina N.K Quarcoo, journalist and copy editor at YEN.com.gh.

Source: YEN.com.gh