• GILBERT P. BAYORAN
Senator Francis “Chiz” Escudero pushed for the lifting of 12 percent value added tax (VAT) on electricity sales, 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.
“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,” Escudero said in a statement.
The veteran legislator noted that electricity costs in the Philippines remain among the highest in Asia, inflating the prices of goods and services.
He urged his colleagues to hasten the deliberation of Senate Bill No. 476, which he filed last year and is now pending before the Committees on Ways and Means and Energy.
Under the Escudero 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.
The senator from Sorsogon 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. This is a targeted strike against inflation, not a blanket reduction that risks fiscal imbalance.” Escudero said.
He further clarified that his proposal should not be conflated with calls to revert EVAT to 10 percent, saying: “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, the senator said.*GPB
ACCESS SUPPORT
The president of the Alliance of Concerned Consumers in Electricity and Social Services (ACCESS), yesterday said that the proposal of Senator Chiz Escudero to exempt electricity from the 12 percent Value Added Tax(VAT) will definitely provide a form of a tax relief to consumers and stimulate economic growth.
Wennie Sancho said this exemption, if approved, could lead to lower electricity costs, reduce inflation and increase disposable household income. It may also boost industrial competitiveness and support economic recovery.
The immediate impact would be lower electricity bills for households and businesses. Savings from lower electricity costs could be allowed to other essential expenses or investment. It will provide a “breathing space” for the consumers who are struggling to make ends meet in these trying and difficult times. It will also serve as an economic stimulus that would impact the economy by way of reduced cost and increased production for businesses, along with the generation of employment and economic activity.
However, the government is apprehensive about the proposal due to potential revenue loss. The Bureau of Internal Revenue (BIR) estimates a 17 percent reduction in VAT collection which could impact government funding for essential services.
Executive Secretary Ralph Recto has expressed concern about the impact on government revenue and debt servicing. However, Sancho argues that electricity consumers should be given a break amid the high cost of living involving products and services.
As distribution utilities like Negros Power had been trying to lower its electricity rates per kWh, the government should also do its part to fulfill its mandate to eliminate taxes that has become a burden to the consumers by the implementation of policies that would provide affordable and reliable power through the reduction of taxes and tariff.*
