The recent introduction of a 15% Value Added Tax (VAT) on power use, commencing January 1, 2024, has raised worries among Tema residents.
According to the Ministry of Finance, this decision is consistent with the requirements of the Value Added Tax (VAT) Act of 2013 (ACT 870).
The installation of VAT is projected to have an impact on domestic power users, with the government highlighting its importance in the Medium-Term Revenue Strategy.
In response to the news, Tema residents voiced concern about the possible impact of the VAT on their cost of living and the broader business climate.
Some locals protested that the new VAT costs on power will drive up the already high cost of living.
Madam Vida Mensah, a vendor at the Community One Market, recognized the financial impact, but emphasized the need of following the law.
Electricity, which is considered an important commodity, is expected to grow more expensive for customers, raising concerns about the burden on household budgets. Madam Mensah noted that the VAT implementation may have a good impact by pushing the people to save energy and use more efficient power practices.
However, several people, such as Mr. Nathaniel Narh, a phone technician, voiced concern about the possible negative impact on companies, particularly those that rely significantly on electricity. With many households’ expenditure already exceeding their income, the increased VAT charges on energy might put even more strain on their budgets, especially when combined with other expenses like the Water Bill.
Mr. Emmanuel Amissah Bonsu, a local, expressed worry about the possible cost on customers, particularly those with lower incomes who do not fit into the lifeline category.
He underlined that some people were already struggling financially as a result of the present economic downturn, and that imposing VAT on energy may compound their problems.
As part of the government’s plan, the Ministry of Finance has requested that the Electricity Company of Ghana and the Northern Electricity Distribution Company work with the Ghana Revenue Authority to guarantee that the VAT on electricity is implemented effectively.
The primary goal is to increase government revenues through strategic budgetary measures.