President Nana Addo Dankwa Akufo-Addo in an address during the 11th day of the partial lockdown on April 9, 2020, announced that the government had absorbed the electricity bills of some category of consumers for April, May and June.
According to him, the measure was part of an earlier one of giving free water to relieve Ghanaians due to the partial lockdown imposed on Greater Kumasi and Greater Accra metropolitan areas as a result of the Coronavirus (COVID-19) pandemic.
Barely a month after the announcement, some people began to spread information that electricity bills had been increased.
A Facebook page known as the “NDC Eye” categorically stated that electricity bills had gone up by 17.5 per cent.
In part, the claim said, “President Akufo Addo who few days ago said he want [sic] to abate the suffering of Ghanaians under covid-19 by making electricity free and partially free has sheepishly turned around and imposed new taxes on Ghanaians.
“He has added new three taxes on our electricity bills. These are NHIS 2.4%, GET FUND 2.5% and VAT 12.5% for all none lifeline users. On one hand, he gave us a 3-month 50% tariff waiver, on the other hand, he slapped us with new taxes to increase our bills, and in the process, taking more from us than he’s given us.”
Even though the claim had earlier been refuted by the Ghana Revenue Authority (GRA), it was still shared by the page, attracted over 20 comments and shared by at least nine people.
Fact-checkghana.com looked at the claim and found it to be to be misleading and totally false.
Explanation:
First of all, the Parliament of Ghana is the only institution clothed with the power to approve levies and taxes on consumers in the country, and not the President, as claimed.
Clause 1 of Article 174 of the 1992 Constitution of Ghana states that “No taxation shall be imposed otherwise than by or under the authority of an Act of Parliament.”
Clause 2 also emphasizes: “Where an Act, enacted in accordance with clause (1) of this article, confers power on any person or authority to waive or vary a tax imposed by that Act, the exercise of the power of waiver or variation, in favour of any person or authority, shall be subject to the prior approval of Parliament by resolution.”
We spoke to the Head of Audit at the Large Taxpayers Office of the GRA, Dr Martin Yamborigya, and he dismissed the claim that new taxes had been imposed on electricity consumers, thereby increasing the levy.
He explained that per the Value Added Tax Act, 2013 (Act 870), electricity in general was supposed to be taxable, except the domestic use up to the lifeline tariff (between 0-50 kilowatts), which the government gave out for free to consumers for the three-month period.
Dr Yamborigya added that there is already a VAT component on electricity bills since 2014 when Act 870 started with implementation, hence consumers already pay taxes, and that is not new.
He further clarified that power producers are supposed to charge VAT on what they produce before they sell to Electricity Company of Ghana (ECG). This is known as the input tax. ECG also charges output tax before selling to consumers, and is supposed to account for both the input and output tax, and deduct the input from the output and pay the difference to GRA.
“However, what is happening now is that when the power producer is billing ECG, they don’t include the VAT, but ECG charges consumers VAT.
“So ECG calculates only the VAT it charges consumers at the end of the month. So they are not able to pay all the amount which has led to huge debt of about GH₵350 million. In view of this development, we decided to spread it in order to lessen the burden on ECG,” Dr Yamborigya said.
He also said after the spread was done, NHIS was 2.4%, GETFund, 2.5% and VAT 12.5%.
“In that case, ECG will not have huge tax to deduct and lead to debt accumulation as is the case currently. So it was meant to be a mechanism between the power producers and GRA in terms of who to appoint to collect the tax,” he stated.
Dr Yamborigya emphasised that “the lack of understanding for this made a lot of people create the impression that GRA is introducing and charging new forms of taxes, which we cannot do, unless Parliament approves that. This is not new.
“That was why we quickly put out a press release to explain this, but people still went ahead with the false information.”
From the above facts and explanation, it is evident that electricity bills have not gone up by 17.5 per cent as being claimed.
