Senator Risa Hontiveros has filed a bill that seeks to remove the value-added tax (VAT) on systems loss charges.

Hontiveros noted that the VAT on systems loss charges are currently being passed on to electricity consumers’ monthly bills—a “double burden” on top of the “already absurd” systems loss charges passed on by electric utilities.

“This VAT on systems loss is a double pain and insult: We are already paying for systems loss that we did not benefit from, and then we will have to pay tax on it. We must immediately end this unfair arrangement, especially now that electricity costs are going up,” Hontiveros said, in filing Senate Bill No. 2076.

The senator said her bill seeks to amend the National Internal Revenue Code (NIRC) to exclude systems loss charges from transactions subject to VAT.

Under the bill, systems loss refers to “the difference between the electrical energy delivered to the distribution system (energy input) and the energy delivered to the residential household consumers (energy output).”

Hontiveros argued that since VAT is a consumption tax on goods and services and systems loss charges—which represents losses in the distribution and electricity delivery—are neither goods nor services, households should not be subjected to VAT.

“By removing the VAT on systems loss charges, we are not just making our tax policies more fair and just - we are also providing immediate relief to consumers facing higher electricity bills this summer season,” she said.

SB No. 2076, she said, is only the first of her planned package of legislative measures to provide assistance to power consumers, especially low-income households, in light of the ongoing Middle East conflict.

Hontiveros said she file an additional bill that would further reduce the burden of power consumers every month.

"(That would) at least help Filipino families save money during this time of crisis," she stressed.