Cabinet, in a meeting convened on Friday, February 2, 2024, has unanimously agreed to rescind the previously endorsed policy of imposing a 15% value-added tax (VAT) on electricity.

This decision signifies that consumers of electricity will no longer be obligated to pay the contentious 15% VAT on their utility bills.

Reports indicate that the government has also committed to engaging in discussions with the International Monetary Fund (IMF) to find a mutually agreeable solution to compensate for the revenue deficit resulting from the abandonment of the VAT on electricity policy, potentially through additional spending reductions.

It is evident that despite both cabinet and Parliament's prior approval of the proposal to implement a 15% VAT on electricity, the vehement opposition from the Trades Union Congress (TUC) and other stakeholders has prompted a significant reassessment, culminating in the decision to reverse course.

Organised labour had issued threats of staging a nationwide protest on Tuesday, February 13, to compel the government to retract the directive to the Electricity Company of Ghana (ECG) and Northern Electricity Distribution Company (NEDCo) to enforce a 15% VAT levy on residential electricity consumption.

Furthermore, the New Patriotic Party had also voiced objections to the tax.