Suspension of VAT on electricity victory for all — ICU

The Industrial and Commercial Workers Union (ICU) has described the government's decision to suspend the Value Added Tax (VAT) on electricity as a victory for labour and Ghanaians.

It has, therefore, commended the rank and file for their support in the struggle against the tax on electricity.

Sharing his thoughts on the suspension, the General Secretary of the ICU, Morgan Ayawine, said the union remained on high alert to respond to any other decision of the government.

Message

"The message we are sending to members out there is that it is a victory.

 It is a victory not only for our members and organised labour, it is also a victory for Ghanaians that the government has suspended VAT implementation on electricity," he said.

He said the government's suspension should remain so, and not something that would be re-introduced another time.

‘’We want to believe that it is a suspension in perpetuity.

It must be a suspension in perpetuity.

So our members should not feel that we have been defeated.

It is not a defeat. 

And we have also told our members and organised labour to be on red alert.

So if the government thinks that it can play a trick and wants to play a smart one on us, we are still there. 

We are still alive. 

We can bounce back," he said.

Struggle

Mr Ayawine said it had been a great struggle by organised labour.

"The government has been talking about suspension but labour did not like the semantics of the suspension.

"We have been calling for the total withdrawal of the VAT on electricity," he said.

Mr Ayawine said the government did not show respect to organised labour.

"We had sent a letter to the government (Ministry of Finance) to address our concerns and so if you want to do that, you would not limit your communication to the Electricity Company of Ghana (ECG) and NEDCo) but also address it to organised labour," he said.

Mr Ayawine said organised labour would not make a mistake resting on its oars and would be on a red alert so that in case the government decided to change its decision, it could also respond.

For him, the fact that there was no discussion on the tax, meant that it was gone forever.

He lauded the support of organised labour to stand with leadership in the matter, adding that it would also work in their interest.

Suspension

The government last week (February 8) officially announced the withdrawal of the implementation of the 15 per cent Value Added Tax (VAT) on electricity tariffs for residential consumers above the lifeline.

The Ministry of Finance wrote to the Electricity Company of Ghana Ltd (ECG) and the Northern Electricity Distribution Company (NEDCo) on December 12, last year to implement the tax policy.

But a statement issued by the Ministry of Finance said the ministry had informed the two utility companies to suspend the implementation of the VAT directive pending further engagements with key stakeholders, including organised labour.

The ministry said it expected the engagements would bring innovative, robust and inclusive approaches to bridge the existing fiscal gap, while bolstering economic resilience.

Since the letter to the ECG and NEDCo leaked about a month ago, some stakeholders in the country expressed their reservations and called for an immediate withdrawal.

Led by organised labour, they first gave a one-week ultimatum to the government to cease the implementation.

Several bodies, including the Consumer Protection Agency, SEND Ghana, the Ghana Union of Traders Association (GUTA) and student unions, had all added their voices for the tax to be withdrawn.

The VAT on electricity is one of the tax measures the government has spelt out in the 2024 Budget to meet its revenue target.