Suspension of excise tax, VAT needed to stem effects of power rate hike

By Chito Chavez

With another impending power rate hike to be imposed by the Manila Electric Company (Meralco), a militant group has pushed for the immediate suspension of the collection of oil excise taxes under the TRAIN (Tax Reform for Acceleration and Inclusion) law and value added tax (VAT) on oil and electricity.

Vowing to protect consumers’ rights, Sonny Melencio chairman of the Partido Lakas ng Masa (PLM) issued the call, claiming that Meralco would be raising electricity charges this month by P0.5782 per kilowatt hour (kWh).

He said that working class households consuming up to 200 kWh will have to pay P114 more in their monthly bill.

This increase in power charges will be an added financial burden in the households, even with two working adults with minimum wage salaries.

The Meralco franchise covers Metro Manila, the entire provinces of Bulacan, Cavite and Rizal as well as certain municipalities in Pampanga, Laguna, Batangas and Quezon.

Minimum wages in Metro Manila are pegged at P537 and P400 for Regions III and IV-A.

“The pending power rate hike only adds legitimacy to our incessant demand for the suspension of excise taxes on petroleum due to the TRAIN law, as well as the value added taxes on oil and electricity. These regressive taxes have a multiplier effect on the prices of basic goods, said Melencio.

Central to the critique of PLM is that excise and value added taxes are passed on to end-consumers, particularly the millions of impoverished Filipinos, instead of big corporations and conglomerates that rake in billions in super profits annually.

What is worst, according to Melencio, is “the effect of these regressive taxes was across-the-board but the increased exemptions to income taxes were only felt by the rich and the middle class”.

He added if the Duterte administration does not suspend the oil-based taxes and approves of the power rate hike, the poverty of the workers and the poor would be aggravated.

Melencio complained the wage orders granted late last year were not even enough to cushion the impacts of record level inflation rates last year.

“Namimilipit na nga kami sa pagsirit sa presyo ng mga bilihin dahil sa TRAIN. Hahambalusin pa kami ng panibagong pagtaas ng presyo ng kuryente. Kami na nga ang may pinakamaliit ang kita, kami pa ang binubuwisan ng malaki (We are already scrimping with the unabated price increase of goods aggravated by TRAIN. Now we are being struck anew by another price hike in electricity. Our earnings are very measly and yet we are being made to pay huge taxes),’’ the veteran activist pointed out.

He also feared a series of power rate hikes could be in the offing as demand for electricity would rise during the summer season.

Melencio also expects things to turn for the worse as global crude prices will likely remain volatile due to political tensions in oil-producing countries.

Meanwhile, Leody de Guzman also of the BMP said “with the new power rate hikes in the period where prices of basic commodities remain high’’ asserted “it’s about time for the people to break free from Meralco’s stranglehold on the electricity needs of the residents of the Greater Manila area’’.

“Ever since the enactment of the EPIRA Law, Meralco has enjoyed its monopoly status and corporate capture of the regulatory processes of the power industry. The EPIRA was to the detriment not only to the almost seven million Meralco customers but also to the economy itself as our power rates have become the second highest in Asia, next to Japan. Excessively high power rates and not workers' wages has always been the number one complaint of investors on the costs of doing business in the country," De Guzman said.

De Guzman also challenged Duterte to wield his much-vaunted political will, do what is beneficial to ordinary Filipinos and not the flinch at the far-reaching influence of Meralco.

"Kung totoong may political will, madali lamang ang solusyon sa mataas na singil sa kuryente: buwagin ang monopolyo ng Meralco (If he really has political will, there is an easy solution to resolve the power hike in electricity that is to remove Meralco’s monopoly)” he added.

Progressive groups are planning to stage protests to thwart the announced power hikes.