DOE, DOF reject calls to suspend VAT on electricity

The Energy and Finance departments on Friday thumbed down a recommendation to suspend the collection of the 12% value-added tax (VAT) on electricity consumption amid the COVID-19 pandemic.

During the Joint Congressional Energy Commission hearing, Senator Risa Hontiveros relayed the recommendation of the Senate Tax Study and Research Office (STSRO) to suspend VAT collection “habang ‘yung bansa natin ay nagre-recover pa sa pandemic.”

Responding to Hontiveros, Energy Secretary Alfonso Cusi said that it will be detrimental for the government to suspend VAT since the state badly needs to raise funds to support measures in battling COVID-19 as well as ease its economic impact.

“Tulong tulong po tayong lahat sa paghahanap kung paano po natin mapa-fund ang ating requirements... so mahirap po siguro kung ngayon tayo magsu-suspend ng VAT, baka wala tayong mapagkunan ng pera,” Cusi said.

For his part, Finance Undersecretary Bayani Agabin said that “suspending VAT is not a good option at this time because we need funds.”

Agabin also explained that VAT is a progressive tax, meaning those who consume more will be taxed more.

“For income reasons and progressive taxation reasons, we believe it’s not a good idea to suspend the collection of VAT at this time,” the Finance official said.—AOL, GMA News