The Cabinet has unanimously decided to drop the previously considered policy of charging a 15% value-added tax (VAT) on electricity.
This means that power consumers will no longer be required to pay the controversial 15% VAT on top of their bills.
Sources close to the government confirmed that the cabinet, at a meeting held on Friday 2 February 2024, has decided to shelve the idea.
The government has also agreed to initiate a conversation with the International Monetary Fund (IMF) to come to a consensus on making up for the revenue shortfall occasioned by the decision to drop the VAT on electricity policy through additional spending cuts.
The proposal to charge 15% VAT on electricity, though previously approved by the cabinet, and by Parliament, the reaction of interest groups such as the Trades Union Congress (TUC) and others to the proposed policy has led to a serious rethink and the decision to reverse it.
Last week, the National Organizer of the ruling New Patriotic Party (NPP), Nana Boakye raised concerns over the intended introduction of the proposed VAT on electricity and urged the government to reconsider its decision.
Organized labour held a meeting last Friday and decided to hold a nationwide demonstration on Tuesday 13 February to push the government to withdraw the directive to the Electricity Company of Ghana (ECG) and Northern Electricity Distribution Company (NEDCo) to implement a 15% VAT charge on residential electricity consumption.