A Labour Consultant, Mr Austin Akufo Gamey, has said the government should have involved the labour unions in the decision-making process to introduce the Value Added Tax (VAT) on electricity consumption.
Mr Gamey explained that for as long as this decision is going to affect workers, it would have been appropriate for the government to engage the labour unions to come to a common ground on this move.
This, in his view, would have averted the current agitations by the labor unions.
Speaking on the Ghana Tonight show on TV3 regarding the recent agitations by the labour unions, Mr Gamey said “The reality is that it just appears we are not learning as a nation and as leaders.
“When the former president [John Mahama] was in office, we came close to a situation where almost all labour unions were clamouring for some conditions of service, legitimately as the case may be, but all things added it was realized that almost 70 percent of national income was being used to pay wages alone.
“So the former president initiated a move and we met at Ho, almost 20 percent of the national unions were present, we had a very useful conversation and the unions having appreciated the concerns of the former president and Finance Minister Seth Terkper came to the conclusion that they should hold on with everything.
“And so therefore lessons have not been learned I am surprised that they want to introduce this measure which will impoverish or create problems and did not involve the unions, they should have involved the unions in the decision-making. It was most unfortunate, this is a bitter lesson.”
The Trades Union Congress (TUC) had told the Minister of Finance Ken Ofori-Atta to withdraw the directive announcing the introduction of the Value Added Tax (VAT) on electricity.
Secretary-General of TUC, Dr Anthony Yaw Baah said that the VAT on electricity will compound the already economic hardships workers and pensioners are saddled with presently.
To that end, they have given the government up to January 31st to withdraw the directive
“It is always the poor including pensioners who bear the brunt and we should not allow that to continue. Today organized labour, our message to the government is that we cannot pay VAT on electricity, we will not pay it today, we will not pay it tomorrow.
“Organized labour is therefore demanding the directive from the Minister of Finance to stop the VAT on the consumption of electricity. So we are giving the government up to 31st January 2024 to withdraw the letter. If by that time the directive has not been given to withdraw it we will advise ourselves,” Dr Yaw Baah said at a press conference in Accra on Tuesday, January 23.
The Ministry of Finance announced that the implementation of the 15% VAT for residential customers of electricity above the maximum consumption level specified for block charges for lifeline units in line with Section 35 and 37 and the First Schedule (9) of Value Added Tax (VAT) Act, 2013 (ACT 870) has commenced.
For the avoidance of doubt, a statement issued by the Ministry said, VAT is still exempt for “a supply to a dwelling of electricity up to a maximum consumption level specified for block charges for lifeline units” in line with Section 35 and 37 and the First Schedule (9) of Act 870.
“The Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) are, hereby, requested 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, in line with Sectio35 and 37 and the First Schedule (9) of Act 870,” it said.
“ 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,” it added.
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