Solons seek tax cuts for low-power users

PARTYLIST lawmakers are pushing for the passage of a bill exempting households with a total monthly consumption of 200 kilowatts per hour (kwh) and less from the imposition of value-added taxes (VAT).

In House Bill 161, or the proposed “VAT Exemption for Covered Electric Billing Act of 2022,” Sagip Rep. Rodante D. Marcoleta and Rep. Caroline L. Tanchay said the measure seeks to mitigate the burden on the more vulnerable by exempting residential households with 200kwh and below total consumption from the imposition of VAT.

“The average consumption per household in the entire country is 562kwh, a far cry from the number of households consuming 200kwh and less,” the solons said in the bill’s explanatory note.

It is vital to provide a little more support for the low-income earners who could no longer keep up with the rising prices of goods and services, the lawmakers said. Exempting the low-income households from the payment of VAT will be a huge relief as it would translate to a discount of almost P 1.20 per kwh, or roughly P240 per month, the bill added.

Marcoleta and Tanchay said electricity is no longer a luxury but a necessity.

“Our daily routines are crippled without a reliant supply of electric power,” the solons’ explanatory note added.

In the latest Department of Energy Compendium of Philippine Energy Statistics and Information, the lawmakers said electricity remains to be the most consumed utility in the residential sector. It ranges from 1,032 kwh in the National Capital Region to 260 kwh in Region IV-A.

They said data on household expenditures also show that electricity cost is higher than medical and household expenses.

According to the lawmakers, this obvious dependence on electricity gave power firms and inequitable leaders unrestrained control as to the charges imposed against the helpless consumers.

Currently, the solons said an electricity bill is riddled with various components with additional value-added tax (VAT) imposition-generation, transmission, distribution, universal and feed-in-tariff allowance. Except for universal, and feed-in-tariff allowance charges, the rest of the components include the imposition of VAT Under the Train Law, or Republic Act (RA) 10963, a 12-percent VAT is imposed on the sale of electricity, transmission by any entity— the National Grid Corp. of the Philippines included—and distribution companies, including electric cooperatives.

“While a decent few may be able to tolerate them, a great majority are seriously impaired by the stack of taxes on top of all the component charges,” Marcoleta and Tanchay said in the explanatory note for the bill. “This is not even taking into consideration yet the unresolved issue of possible double taxation involved in the payment of electric bills.”

Under the bill, VAT exemption for covered residential households with 200kwh and less electrical consumption in a month is exempt from the imposition of VAT on the sale of electricity, transmission by any entity, including the National Grid Corporation of the Philippines, and distribution by companies, and electric cooperatives.

The bill said the exemption should be automatically applied by the private utilities and rural electric cooperatives in their statements of accounts without the need for application from the consumer.