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Ghana Rescinds New Power Tax After Public Dissent

Authorities have opted to defer the implementation of the tax pending discussions to address the dispute.

Ghana’s government has decided to pause its plans to enforce a 15% tax on electricity, responding to widespread public concern over its potential impact on the already burdensome cost of living.

Originally intended to apply to domestic electricity consumers, the proposed value-added tax (VAT) drew strong opposition from labor unions, prompting them to announce nationwide protests scheduled for next week.

Authorities have opted to defer the implementation of the tax pending discussions to address the dispute. This decision came shortly after the government introduced a fuel emissions levy, eliciting mixed reactions from the populace.

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Under this new measure, Ghanaians are required to pay an annual levy based on the carbon emissions produced by their petrol or diesel vehicles. Critics fear that these additional taxes could exacerbate the country’s economic challenges, particularly the soaring cost of necessities like fuel.

In an official statement released on Wednesday, the finance ministry instructed the main power distributors, Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO), to suspend the introduction of the new levy.

The ministry emphasized the need for extensive dialogue with industry stakeholders and labor unions to address their concerns about the tax’s impact on consumers and businesses. However, the Trades Union Congress (TUC) stated that the government had not formally communicated its decision to them, and thus, plans for protests scheduled for next Wednesday remain unchanged.

Trade unions assert that imposing additional taxes will further strain families and businesses, aggravating the alreadyi high cost of living. Amid Ghana’s most severe economic crisis in decades, the government is striving to boost revenue, having entered into a $3 billion bailout program with the International Monetary Fund (IMF).

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The country has grappled with power shortages, known locally as “dumsor,” attributed to inadequate maintenance of hydro and thermal energy sources, as well as reliance on gas for electricity generation. Any disruption in gas supply often results in power outages, underscoring Ghana’s energy challenges.

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