A Labor Consultant, Mr. Austin Akufo Gamey, has expressed the view that the government should have engaged labor unions in the decision-making process regarding the introduction of Value Added Tax (VAT) on electricity consumption.
He emphasized that considering the impact on workers, involving labor unions would have been appropriate to reach a consensus and prevent the current agitations.
Speaking on the Ghana Tonight show on TV3 in response to recent labor union protests, Mr. Gamey pointed out the need for the government to learn from past experiences.
He recalled a situation during the tenure of former President John Mahama where a similar issue was addressed through dialogue with labor unions, resulting in a beneficial outcome.
“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.”
Mr. Gamey lamented the lack of lessons learned and expressed surprise at the government’s decision to introduce a measure without consulting the unions, considering the potential negative consequences.
He emphasized the importance of involving labor unions in the decision-making process, stating that it was an unfortunate oversight.
“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 Trades Union Congress (TUC) has called on Finance Minister Ken Ofori-Atta to withdraw the directive on the introduction of VAT on electricity.
TUC Secretary-General, Dr. Anthony Yaw Baah, argued that this move would worsen the economic hardships faced by workers and pensioners. The TUC has given the government until January 31st to withdraw the directive, threatening further action if it is not heeded.
The Ministry of Finance, as part of its Medium-Term Revenue Strategy and the IMF-supported Post Covid-19 Programme for Economic Growth (PC-PEG), announced the commencement of a 15% VAT for residential electricity customers above specified consumption levels.
The Ministry clarified that VAT remains exempt for electricity supplied to dwellings up to a maximum consumption level specified for lifeline units.
The Ministry directed the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) to collaborate with the Ghana Revenue Authority (GRA) for the implementation of VAT on residential electricity customers, effective January 1, 2024.
The letter also instructed GRA to coordinate with ECG and NEDCO for the collection and transfer of revenues from the implemented VAT.“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.