The “over-taxation” in the electricity sector is being urged to be stopped finally in the next administration and a proposed legislation scrapping value added tax (VAT) on electricity rates will be lodged when the next Congress resumes.

"We need to stop this over-taxation of consumers of electricity and we will refile House Bill 249 in the 19th Congress to exempt electricity from VAT," Assistant Minority Leader and ACT Teachers Party List Representative France Castro noted.

The “over-taxation” in the electricity sector has been cited as the main reason why the Philippines has one of the most expensive electricity rates in Asia and that also served as a deterrent to investment flows especially for energy-intensive manufacturing facilities.

Castro has debunked the claim of outgoing Finance Secretary Carlos Dominguez III that the power sector is not plagued with “double taxation” with the lawmaker claiming that the energy sector is not just afflicted with double taxation, but it is an over-taxed sector.

Players in the power industry have relentlessly raised complaints about the layers of taxes being enforced through the chain of their operations. If they source fuel that they will utilize for electricity generation, they are already required to pay with value added tax (VAT) and excise taxes; and when the electricity output is sold to the consumers, additional layers of taxes are also imposed.

"As it is, 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,” Castro stressed.

She thus indicated that “in the 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.”

Based on calculations that the lawmaker presented, “for a household consuming 200-kilowatt hours of electricity a month, the VAT is estimated at P191.00, an amount quite substantial to the average working Filipino.”

Castro further stated “what is worse, VAT is not only imposed on the generation of consumed power but also on system loss charges, thus, clearly making the Filipino people suffer twice over.”

She qualified that “while it may have helped the government’s fiscal position, it is imperative that Congress still act on the removal of VAT on electricity as it is the fastest and most direct form of economic relief for all Filipino households and businesses.”

The solon expounded that “whatever revenue losses to 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.”