Senator Chiz Escudero said electricity sales should be exempt from the 12-percent value-added tax (VAT), saying this targeted relief in the power sector under his proposed bill would have immediate impact and ease household and industrial burdens without undermining fiscal stability.
Escudero acknowledged the recent remarks of Executive Secretary Ralph Recto, who cautioned against proposals to revert the expanded VAT to 10 percent owing to the government’s P1.6 trillion debt, and emphasized that his measure differs fundamentally as it does not reduce VAT across the board but instead zeroes in on electricity, a sector where relief is most urgently needed.
“Lifting the tax on electricity is a fiscally responsible choice.”
“While broad tax cuts may strain government revenues, lifting the tax on electricity is a fiscally responsible choice. It balances social equity with economic necessity, ensuring that families and industries feel relief without compromising our ability to service debt, among others,” the veteran legislator said.
The seasoned lawmaker noted that electricity costs in the Philippines remain among the highest in Asia, inflating the prices of goods and services.
The senator urged his colleagues to hasten the deliberation of Senate Bill No. 476, which he filed last year and now pending before the Committees on Ways and Means and Energy.
Under his measure, the following transactions shall also be exempt from VAT: sale of electricity by generation, transmission and distribution companies and electric cooperatives; and services of franchise grantees of electric utilities.
“SB 476 seeks to address the high electricity cost by exempting electricity sale from value-added tax. Such tax relief can lower operating costs of industries and businesses, temper inflation, and increase disposable household income while generating revenue through increased economic activity and consumption,” Escudero pointed out.
He also said that removing VAT on electricity is a direct anti-inflationary measure.
“Every peso saved on power bills translates to more affordable goods and stronger competitiveness.”
“Every peso saved on power bills translates to more affordable goods and stronger competitiveness. This is a targeted strike against inflation, not a blanket reduction that risks fiscal imbalance,” Escudero stressed.
He further clarified that his proposal should not be conflated with calls to revert EVAT to 10 percent.
“Secretary Recto is right to be cautious about across-the-board cuts. My measure is different. It is surgical, not sweeping. It addresses one of the most pressing pain points of our economy while respecting fiscal realities,” Escudero concluded.
