Ghana’s New Tax Burden: Consumer Protection Agency Raises Concerns

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The Consumer Protection Agency (CPA) in Ghana has voiced serious concerns over the government’s recent tax hikes, calling them “excessive” and a heavy burden on its citizens. In a year marked by over 20 new tax introductions, a sense of “tax fatigue” is palpable among the Ghanaian populace.

Kofi Kapito, the CEO of the CPA, expressed his discontent during an interview on the Citi Breakfast Show. He pointed out the newly implemented Value Added Tax (VAT) on residential electricity consumption as a key example of the escalating tax pressures.

“The consumer is tired,” Mr. Kapito said. “This year, from January 1st, we’ve seen more than 20 taxes introduced. Even registering a vehicle now incurs a 100 cedi fee. Insurance costs are climbing.”

On January 1, 2024, the government announced the imposition of VAT on a specific segment of residential electricity users in Ghana. A directive sent to the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO), signed by Finance Minister Ken Ofori-Atta, indicated that the VAT would be applied to residential customers exceeding a set maximum consumption level for block charges for lifeline units.

This measure is part of the government’s strategy for economic recovery post-Covid-19. The implementation of VAT for residential electricity customers aligns with Sections 35 and 37 and the First Schedule (9) of the Value Added Tax (VAT) Act, 2013 (ACT 870).

The government’s objective with this initiative is to bolster revenue generation, supporting the country’s Medium-Term Revenue Strategy and the IMF-Supported Post-COVID-19 Program for Economic Growth (PC-PEG).

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