Villafuerte seeks Congress OK of VAT exemption bill
To help PBMM slash electricity rates
AS consumers brace for further increases ahead in their monthly electricity bills, Camarines Sur Rep. LRay Villafuerte on Thursday said he wants the 19th Congress to revisit the National Internal Revenue Code (NIRC), with the end in view of helping the President reverse the rising cost of power by suspending value added tax (VAT) payments on system loss charges in the sale of electricity.
Villafuerte, the former governor who now represents Camarines Sur in the House of Representatives, said his proposal on putting VAT payments on hold to stave off price adjustments in electricity rates aligns with the support of the bigger chamber under the leadership of Speaker Martin Romualdez for the inflation-busting initiatives of the Marcos administration.
The former governor suggested this NIRC review as the 8 million customers of power distributor Manila Electric Co. (Meralco) face higher electricity rates this month following an upward rise in the power rate of almost 43 centavos per kilowatt-hour (kWh), increasing the overall rate to P11.8569 per kWh from P11.4295 last October.
This means an adjustment of about P85 in the electricity bills of households that consume an average of 200 kWh per month.
“Current efforts by the Marcos administration to arrest the spiraling cost of electricity are being stymied by rising consumer demand and the consequent increase in rates,” Villafuerte, National Unity Party (NUP) president, said.
Villafuerte said, “The Congress can thus help the President cut our consumers’ monthly power bills by revisiting the NIRC with the end in view of temporarily suspending the VAT payments on system loss charges in the sale of electricity,” he added.
The CamSur congressman issued this statement as Romualdez vowed recently that alongside taking steps to pull down the cost of rice and other foodstuff, the bigger chamber will “work to further reduce electricity rates … accomplishing that will surely lead to a further moderation of inflation.”
The country’s electricity rates are among the highest in the region.
For the Bicolano Solon, the Congress can achieve the Speaker’s commitment by acting on a pending measure—House Bill (HB) No. 8231—authored by Villafuerte that puts off for three years the VAT payments on system loss charges in electricity sales.
This measure is pending with the House committee on energy.
In a recent interview in Cotabato City, President Marcos assured the public that his Administration is carrying out plans and strategies to reduce power rates amid the current high demand for electricity.
The President said he has urged the National Grid Corp. of the Philippines (NGCP)—the privately-owned franchise holder in charge of operating the country’s three power grids—to build its promised transmission lines to boost the supply of electricity, especially in areas not currently connected to the national power grid.
During the Labor Day rites at Malacañan Palace, meanwhile, the President said the Energy Regulatory Commission (ERC) has temporarily suspended the operation of the Wholesale Electricity Spot Market (WESM) whenever the NGCP declares a red alert or insufficient power to meet consumer demand, as a way to put off further rate hikes.
Created under Republic Act (RA) No. 9136, or the Electric Power Industry Reform Act (EPIRA) of 2001, the WESM is a trading venue where power generators sell to customers their excess electricity not covered by their existing supply contracts.
Apart from the three-year suspension of VAT payments on system loss charges in electricity sales, Villafuerte said that HB 8231 further seeks to amend Section 148 of the NIRC by reducing by 50%, also for three years, the excise tax payments on petroleum products.
Rising demand for fuel along with output cuts from Saudi Arabia and geopolitical factors like Russia’s invasion of Ukraine have tightened global oil supply, triggering a spike in prices that hit $134 a barrel in March 2022, from $76 in January 2022.
Locally, the high cost of crude overseas has raised the current average price of gasoline to P70 a liter, from about P45 in 2019.
Moreover, HB 8231 likewise aims to cut, also by 50% and for three years, the excise taxes on coal, and to suspend for the same period the collection of applicable duties on imports of coal and petroleum products, he said.
“This proposed measure actually seeks to reduce the excise tax on petroleum products and coal by 50%, suspend the imposition of applicable duties on their importation, and exempt the system loss charge in the sale of electricity from the VAT, for a period of 3 years,” Villafuerte said.
“HB 8231 provides that within 30 days from the effectivity of this proposed Act, the Secretaries of the DOE (Department of Energy) and DOF (Department of Finance ) shall, upon the recommendation of the Commissioner of the BIR (Bureau of Internal Revenue), promulgate the necessary IRR (implementing rules and regulations) for its effective implementation,” he added.
Villafuerte said he filed HB 8231 “in a bid for the 19th Congress to mitigate the effects of the imposition of VAT and the increased excise taxes on petroleum products and coal that are too much of a burden on consumers and businesses that struggle to cope with elevated inflation.”
