Senators likely to pass bill scrapping 12% VAT on systems losses

MANILA, Philippines – Senators Edgardo Angara, Panfilo Lacson, Aquilino Pimentel Jr. and Pia Cayetano welcomed the proposal of their counterparts at the House of Representatives to remove the 12-percent value added tax (VAT) from systems losses and lifeline subsidies.

“I am fine with that. Small percentage lang naman ang lifeline users,” Angara said.

Sen. Francis Escudero, chairman of the Senate ways and means committee, said he agrees with the House’s proposal.

“We’ll have to await receipt of the House version. We have conducted hearings of that as of last year and I am personally in favor of it in principle,” Escudero said.

Legarda also pushed for the scrapping of subsidy shouldered by consumers for lifeline users.

“Consumers also pay P0.1208/kWh to subsidize electric users using 100 kWh or less monthly. Consumers shouldn’t be taxed for donations of lifeline rate subsidy,” she said.

Lacson said the Senate must lose no time in adopting the same.

“Simply put, it’s VAT on subsidy and VAT on distribution inefficiency. Worse, if we sum up our electric consumption bills, it’s effectively VAT on VAT,” Lacson added.                       

Pimentel, however, said that the entire category of “systems losses” should not be included in the electricity bill.

Cayetano also supports measures that will remove VAT on systems losses, saying that “it can’t be considered a service nor a product provided by electric companies.”

“Scrapping VAT on lifeline users would provide substantial and long term relief to poor electricity consumers, which is better compared to giving them one-time dole-outs of P500 each, a system which is prone to corruption.” – Christina Mendez