DOE backs VAT removal on electricity, but calls for study

The Department of Energy (DOE) supports proposals to remove the value-added tax (VAT) on electricity as part of efforts to ease the burden on consumers, but said the move requires careful study.

“Suportado ng DOE ang lahat ng layunin na naglalayong mapababa ang presyo ng kuryente sa bansa, kabilang dito ang pag-aaral na bawasan o alisin ang VAT sa kuryente,” Energy Secretary Sharon Garin said in a Facebook post.

(The DOE supports all measures aimed at lowering electricity prices in the country, including the possibility of reducing or removing VAT on electricity.)

Garin said lowering electricity costs remains a primary mandate of the department.

“Will VAT removal lower electricity prices? It will,” she said.

However, she stressed that the proposal needs further evaluation, noting that the decision does not rest with the DOE.

“Nasa economic managers at Kongreso ito dahil may mas malawak na epekto sa ekonomiya,” she said.

(It is in the hands of the economic managers and Congress, as it has broader implications for the economy.)

Sen. Risa Hontiveros on Monday filed a bill seeking to remove the VAT on system loss charges in electricity bills.

Senate Bill No. 2076 aims to amend the National Internal Revenue Code (NIRC) to exempt system loss charges from VAT, amid reports of higher electricity costs during the dry season.

In a separate statement, the DOE echoed Garin’s position, saying any tax measure must be carefully assessed by the country’s economic managers, particularly the Department of Finance (DOF), and Congress to ensure that lower electricity costs are balanced with the government’s continued delivery of essential public services.

The agency said it respects that tax policy falls under the mandate of the DOF and the broader economic team.

“The Department stands ready to provide technical inputs on the energy-sector impact of any proposed measure, in support of a whole-of-government approach that protects both consumer welfare and fiscal sustainability,” it said.

The DOE added that improving electricity affordability should also involve sustained energy sector reforms, including more efficient power generation, improved grid reliability, stronger competition, and responsible energy use.

“These proposals must be weighed alongside long-term measures that ensure stable, sustainable, and affordable power for consumers,” it added.—MCG, GMA News