Senator to appeal tax exemption for local coal

With President Duterte expected to sign into law today the new tax reform measure approved by Congress, Sen. Joel Villanueva said yesterday he would appeal for the repeal of a provision retaining value added tax exemption for local coal.

Villanueva vowed to make the request following what he said was the suspicious last-minute amendment to the proposed Tax Reform for Acceleration and Inclusion (TRAIN) to retain the exemption contained in the 41-yearold Presidential Decree 972.

“The TRAIN will be automatically amended if the law is repealed,” Villanueva said.

The measure, which seeks to reform the country’s 20-yearold tax system, included, among others, an excise tax of P50 per metric ton of local and imported coal in the first year of implementation in 2018; P100 per metric ton in the second year and P150 in the third year of implementation and every year thereafter.

Villanueva said while local coal producers will pay P800 million in increased excise taxes, they will still take in some P5 billion in profits because of VAT exemptions representing foregone revenues for the government.

The proposal to impose a coal tax emanated from the Senate, particularly from Villanueva and Sens. Loren Legarda and Juan Miguel Zubiri, with a higher figure. It was not present in the version of TRAIN passed by the House.

According to the senators, the bicameral conference committee – the Senate and House panel tasked to reconcile the conflicting provisions of the TRAIN versions passed by the two chambers – agreed on the increased tax.

The bicameral panel, Villanueva said, also agreed to his proposed amendment to scrap VAT exemption for local coal, which comprises 40 percent of the total coal used for power generation.