Senator Kiko Pangilinan filed a measure to exempt system loss charges in electricity bills from the value-added tax (VAT), aiming to ease the burden of high electricity costs on Filipino consumers.
Senate Bill No. 2124, or the VAT Exemption on Systems Loss Act for Residential Household Consumers, seeks to amend Section 109 of the National Internal Revenue Code of 1997, which provides the list of transactions that shall be exempted from VAT.
“Hindi na dapat pa nila saluhin ang dagdag na pahirap ng VAT sa system loss charges, lalo na at ito naman ay wala sa kanilang control.”
“Sobra-sobra na ang kahirapan na dinadanas ng ating mga kababayan. Hindi na dapat pa nila saluhin ang dagdag na pahirap ng VAT sa system loss charges, lalo na at ito naman ay wala sa kanilang kontrol,” Pangilinan said.
“Kamakailan lamang ay sinabi ng PSA (Philippine Statistics Authority) na isa ang presyo ng kuryente sa nagpalobo ng inflation rate na umabot sa 7.2% noong nakaraang buwan. Isa na naman itong mahalagang hudyat na panahon na para pagtuunan natin ng pansin ang mga hakbang para mapagaan ang pasanin ng mga Pilipino,” the veteran legislator added.
According to the PSA, housing, water, electricity, gas, and other fuels accounted for 23.2% of the 7.2% headline inflation. A major contributor to the spike, it shows that utility-related costs—including electricity—weigh heavily on household budgets.
The seasoned lawmaker’s bill aims to exempt the system loss component—“which allows the recovery of costs associated with electricity lost due to technical and non-technical factors in the power system”—in the sale of electricity by distribution companies and electric cooperatives to residential household consumers.
The Energy Regulatory Commission (ERC) will also be mandated to “ensure that the reduction arising out of this exemption shall not be passed on to the residential household consumers through distribution wheeling charges or other pass-through components”.
Residential electricity prices in the Philippines remain among the highest in Southeast Asia. In 2021, the residential electricity rate was US$0.16/kWh, second only to Singapore and higher than those in Thailand, Indonesia, and Malaysia.
Under existing rules, consumers pay VAT not only on actual electricity consumption but also on ancillary charges, including system loss. Pangilinan argued that taxing these losses effectively compounds the financial burden on consumers.
The senator expressed hope that Congress would prioritize the measure as part of broader efforts to make electricity more affordable and improve consumer welfare.
“Ang panukalang batas na ito ay tungkol sa pagiging patas, pananagutan, at pagprotekta sa ating mga mamimili.”
“Ang panukalang batas na ito ay tungkol sa pagiging patas, pananagutan, at pagprotekta sa ating mga mamimili,” he added.
Pangilinan also called on fellow lawmakers and stakeholders in the energy sector to support reforms that would promote transparency, efficiency, and lower electricity rates nationwide.
