Ghana’s cabinet has reportedly withdrawn a controversial policy to impose a 15% Value Added Tax on domestic consumption of electricity following threats by organized labour to hit the streets on February 13 to demand the withdrawal of the directive.

According to reports by pro-government news portals, the cabinet took a unanimous decision on February 2, 2024, to retract the previously approved policy.

Consequently, domestic consumers will no longer be obligated to pay the controversial 15% VAT on their electricity bills.

The government had argued the tax was part of measures to shore up revenue and support the government’s IMF-supported programme.

The University Teachers Association, UTAG which is a member of organized labour has questioned the thought process that went into the decision to implement the policy. Prof. Mamudu A Akudugu is President of UTAG

The government per media reports plans to engage with the International Monetary Fund (IMF) to address the revenue deficit resulting from dropping the VAT on electricity, likely through additional spending cuts.