Cabinet drops 15% VAT on electricity
During a Cabinet meeting held on February 2, 2024, it was unanimously decided to abandon the previously approved policy of imposing a 15% Value Added Tax (VAT) on electricity. As a result, consumers will no longer be required to pay the controversial 15% VAT on their utility bills.
The decision to reverse the policy was made in response to the negative feedback from organizations like the Trade Unions Congress (TUC), despite the initial approval by both the Cabinet and Parliament. The government has therefore chosen to reassess its position and engage in discussions with the International Monetary Fund (IMF) to reach an agreement on compensating for the expected revenue shortfall caused by the abandonment of the VAT on electricity.
It is possible that additional spending cuts may be necessary to address this deficit. The final decision on the policy, whether to completely eliminate it or significantly reduce it, will become clearer after discussions with the IMF.
On another note, Organised Labour, in response to the directive for the implementation of the 15% VAT on residential electricity consumption by ECG and NEDCO, held a meeting on February 2, 2024. They have subsequently decided to hold a nationwide demonstration on February 13, 2024, to urge the government to withdraw the directive.
In preparation for the demonstration, Organised Labour has informed the Inspector General of Police and all 16 regional commands. Members of Organised Labour, both in the public and private sectors, have been instructed to wear red bands at work from February 5, 2024, to February 12, 2024.
Organised Labour will provide further details regarding the demonstration route and other communications through its leadership. If the VAT directive is not withdrawn after the demonstration, Organised Labour reserves the right to convene and decide on initiating a nationwide strike.
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