Scrap levies and taxes on electricity – ACEP to gov’t

The Africa Center for Energy Policy (ACEP) has urged government to scrap the levies and taxes imposed on electricity, saying these levies have led to the immense increase in the electricity tariffs.

According to ACEP the Energy Levies Act which imposed these levies and taxes on electricity consumption are crippling local businesses.

The Center also argued that the scrapping of the levies would be more prudent than a reduction in electricity tariffs.

Speaking on the Citi Breakfast Show, the Executive Director at ACEP, Mohammed Amin Adam explained that levies on power consumption were directly responsible for the significant increase in tariffs.

“Another reason is the levies and taxes. Now you have 10 percent levies on every kilowatt per hour consumed then you have the commercial consumers, 17.5 percent VAT then you also have a 7 cedi flat rate on every meter for all consumers.”

Withdrawal of levies more crucial than reduction in tariffs

There have been frequent calls from businesses for the reduction of the electricity tariffs, most recently from the Association of Ghana Industries (AGI) who called on government to reduce the tariffs for local industries and address the over-billing errors.

According to the AGI, its members are paying more than the agreed utility tariffs announced by the Public Utilities Regulatory Commission in December last year.

But Mr. Amin is of the view reducing the tariffs will not be the best course of action because that may negatively impact utility providers like the Electricity Company of Ghana.

He insisted that a withdrawal of the levies is instead needed.

“We don't think that reducing the electricity tariffs is the best way because that is what goes to ECG. That is what goes to the other utilities and if we reduce it, we will amplify the financial challenges or the financial viability of these companies. What we will opt for is the withdrawal of the energy levies act which imposed these levies and taxes on electricity consumption,” Mr. Amin explained.

Government should consider long term effect of levies

The government has argued that its impositions of these levies was geared towards raising revenue for development and also addressing the deficit problem but the ACEP Executive Director has implored government to factor in the long term effects of these levies.

“…but what about the opportunity cost. Industry is collapsing. Some of the companies are relocating to Ivory Coast and they are all complaining about high cost of electricity. What about them? They create the most jobs in the economy, they pay taxes to our government and these are the industries that actually subsidies the consumption of electricity by residential consumers.”

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By: Delali Adogla-Bessa/citifmonline.com/Ghana