The Power Bloc composed of solons from the PHILRECA Party List, APEC Party List, RECOBODA Party List, and Ako Padayon Pilipino Party List at the House of Representatives has long proposed legislation exempting electricity from the imposition of value-added tax (VAT).
Filed last July 2019, at the start of the 18th Congress, House Bill 3248 proposes to exempt the sale of electricity by generation, transmission, and distribution utilities from VAT. The bill aims to lower the cost of electricity by removing multiple taxes on the electric consumption of end consumers.
The solons seek to reintroduce the proposed measure in the 19th Congress in order to alleviate the situation and unburden the electricity end-users.
The legislators believe that the electricity consumers are taxed excessively, thus there is a need to review and discuss the matter. Rep. Sergio C. Dagooc of APEC Party-List pointed out, for example, that the System Loss Charge – the cost of power lost due to technical and non-technical system losses – is included in the imposition of VAT.
“It is high time that we carefully review the taxes in our monthly electricity bill and make the necessary changes. It is unfair that the consumers are obligated to pay the VAT for services not delivered to them, such as the System Loss Charge,” he said.
“While our bill seeks to exempt the whole parts of electricity bill from VAT, we understand the significant contribution of these taxes to our economy. Thus, we are open to the idea of subjecting the electricity sales to VAT only once, contrary to the status quo wherein tax is applied in all the itemized charges in the unbundled rate. Further, with the increasing fuel prices, the generation and transmission charges – which are taxable – also increase, resulting in a higher amount passed on to the electricity consumers,” he added.
Rep. Presley C. De Jesus of PHILRECA Party-List said that with the current economic state of our country, together with the effects of the global pandemic and other geopolitical factors, electricity costs have been rising at an alarming rate, accentuating the exigency of the measure.
“As public servants, it is our duty to be responsive to the needs of the people and provide reasonable and actionable solutions for the betterment of their lives and of our economy,” Rep De Jesus emphasized.
The solons seek to reintroduce the proposed measure in the 19th Congress in order to alleviate the situation and unburden the electricity end-users. With lower electricity costs, the measure hopes to spur investments, boost the competitiveness of MSMEs, and increase the purchasing power of households for supplies, goods, and services, eventually allowing the State to recover the VAT foregone.