Bill exempting electricity sale from VAT still pending in House: Durano

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Monday, September 1, 2014

CEBU 5th District Rep. Joseph Ace Durano has co-authored a bill exempting electricity sale from value-added tax, to help arrest the increase in power rates in the country.

Durano said House Bill 344, which was introduced by Reps. Neri Colmenares and Carlos Zarate of Bayan Muna and co-authored by him, has been pending with the House Committee on Ways and Means since July 23, 2013.

The bill, Durano said, seeks to amend Sections 108 (ii) and 109 (1) of the National Internal Revenue Code, as amended by Republic act 9337.


If approved, sales of electricity by generation companies, transmission and distribution companies and the services of franchise grantees of electric utilities will be exempted from VAT.

In their explanatory note, the legislators said VAT on electricity is another burden on the already “over-taxed shoulders of our people, especially those whose incomes are barely enough to cover their basic needs.”

They said that in time of unabated price increases of fuel, food and other commodities, it is the duty of Congress to provide economic relief to the Filipino people.

“The removal of VAT on electricity is one of the most viable options for Congress to immediately act on,” they said in their explanatory note.

They said that the Philippines already has one of the highest costs of electricity in Southeast Asia.

The 2011 addition of 5.8 centavos per kilowatt-hour (kWh) on generation charges plus the 12 percent VAT raised the price of electricity to P9.55 per kWh.

For a household consuming 200kWh of electricity a month, the VAT is estimated at P191, which the legislators described as substantial for the average working Filipino.

What’s worse, the congressmen said, VAT is not only imposed on the generation of power but also on system loss charges.

“This is making the Filipino people suffer twice over,” they said.

“Whatever revenue losses will be suffered by government will definitely be offset by the increased purchasing power of all households as well as cheaper production costs, redounding to a more robust and equitable economy,” they said.

Published in the Sun.Star Cebu newspaper on September 02, 2014.


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