TRAIN seen to hit consumers hard
Higher taxes on coal and fuel
Almost akin to “stealing Christmas” from the unsuspecting public, the Tax Reform for Acceleration and Inclusion (TRAIN) Bill of the Duterte administration will financially cripple Filipino consumers on two fronts – with their electric bills anticipated rising due to the 3,000 percent hike in coal excise taxes and they would even be more cost-battered with R6.00 to R9.00 per liter hike in fuel prices.
And in the course of deliberations of the excise tax measure, the Department of Energy (DOE) was reportedly not there to take up the cudgels for the Filipino consumers.
Seen more problematic of these two gut issues would be the excise tax soar on fuel, because that could redound to angst-inducing pump price increases of R6.00 to R9.00 per liter that would directly affect motorists and the use of diesel plants for peaking in the electricity system.
According to sources from the Department of Finance (DOF), they have referred the proposed policy at least three times for DOE comments, but the feedback they have gotten was for them to go ahead with the measure and they have been assured of the energy department’s support.
Now, that the financial brunt of the tax reform policy is turning apparent, the DOE is having a “change of heart” and trying to lend “sober voice” in condemning the rate impact of the increase in coal excise taxes.
Senate Committee on Energy Chairman Sherwin T. Gatchalian has been more vocal on his opposition to the perceptible soar in coal excise tax, with his office calculating that the cost impact could run from R0.0219, R0.0548 and R0.076 per kilowatt hour (kWh) respectively, depending on the consumption base of the end-user.
There will be a three-tiered increment in excise tax for coal as fuel for power generation – starting at R100, then R200 and later on at R300 per metric ton as propounded under the TRAIN measure. That will be tranches of increases from currently at R10 per metric ton.
Spikes in electricity rates due to the tax imposition, the senator added, would be unavoidable for Filipino consumers because 50 percent of the country’s electricity supply relies on coal-fed power generation.
The lawmaker said “the impact of R100 increase in excise tax on coal will be R4.70 increase in the bill of an average consumer consuming 200 kilowatthours (kWh) every month.” At R200 excise tax, the cost impact will roughly double to R9.57 for the same consumption bracket of consumers; and at R300 excise tax, it will be a higher cost burden of R14.35.
Gatchalian coherently stated “the proposal on increasing the excise tax on coal seems sound if it will reduce carbon emissions in our country, but since this is a pass-on charge, there is no incentive for the coal companies or the coal power producers to reduce the consumption of coal because this will just be passed on to the consumers.”
It is worth noting that more than 50 percent of the rate component in the electric bill accounts for the generation charge – wherein the fuel for power generation such as coal, gobbles up bulk of the cost.
The lawmaker’s lament is anchored on the fact that “the consumers basically have no choice but to accept what is being billed to them every month.”
Beyond “financial distress” it will have on households, Gatchalian similarly warned on probable “repulsive effect on investments” when industrial users of electricity would be hit.