Scrapping VAT on power a win for all

Anent your news article on scrapping the 12 percent value-added tax (VAT) on power rates (News, 5/20/2022), the undersigned would like to commend outgoing Energy Regulatory Commission chair Agnes Devanadera for “suggesting” this to the coming administration. Since the passing of Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001, this issue had been floated and continues to be discussed during deliberations led by the power bloc congressmen (Philreca, Apec, Recobada, Ako Padayon Pilipino) in the House of Representatives.

Aside from the VAT on the generation charge, the undersigned propose the total scrapping of the multiple taxation scheme as it brings a heavy burden to the 25 million electric consumers nationwide, including consumers of electric cooperatives and businesses.

The 25 million electric consumers nationwide have been heavily burdened with multiple VAT taxes on the generation, transmission, distribution, and systems loss. Scrapping the VAT on these collective charges will lower power rates significantly and would definitely alleviate the burdens of the consumer who is just coming out of an economic and health crisis due to the COVID-19 pandemic, and now facing the initial effects of the Ukraine-Russian war.

Some economic managers may deem this proposal as a heavy loss of government revenues. On the contrary, this will encourage increased revenues for the government. More foreign and local investors will be encouraged to put up job-creating businesses. More jobs and savings for the consumers mean increased consumers’ purchasing power. Moreover, this will increase demand in power and push the power industry to further develop. All of these would mean a win for consumers, businesses, and the government.

RODOLFO A. PLOPINIO
Board President
Occidental Mindoro Electric Cooperative