The African Center for Energy Policy (ACEP) has expressed its disappointment in the government for maintaining the 17.5 percent VAT on industrial consumers.
According to ACEP, government could have abolished the tax to provide some relief consumers of electricity.
Speaking to Citi Business News, the Deputy Executive Director of ACEP, Ben Boakye stated that even though there was a 50 percent reduction of levies on electricity, government removing 17.5 percent VAT on industrial consumers could have helped businesses expand their operations.
“This could have freed up some cash flow for businesses to invest in expansion and improve production. In fact, the VAT on industrial consumers is another nuisance tax because government eventually reimburses VAT to industry through the sale of their output”.
He pointed out that since the move would have sent a neutralizing effect, if government had removed the tax to free up capital for investment.
“Otherwise, this becomes a lazy way of frontloading government revenue without considering its impact on the health of businesses,” he said.
Mr. Boakye however lauded government for reducing some levies on electricity.
According to him, it will provide some respite for domestic consumers who have been affected by the high electricity tariff
“The budget announced 50 percent reduction of levies on electricity; a reduction of National Electrification Levy from 5% to 3%, and Public Lighting Levy from 5 percent to 2 percent. This is in addition to budgeted lifeline subsidy of GHS83.8 million. This will provide some relief for consumers of electricity,” he said.
By: Lawrence Segbefia/citibusinessnews.com/Ghana