Govt asked to disclose VAT collected from power rates

MANILA, Philippines - A political organization asked the Philippine government to disclose value-added tax (VAT) collections levied on power rates, saying that the tax has unduly increased consumers’ electric bills. The umbrella group Bagong Alyansang Makabayan (Bayan) said government should fully disclose its earnings from the Value Added Tax (VAT) on power rates saying that industry sources are estimating government has already collected more than P30 billion from the generation, transmission and distribution sectors of the power industry. “There is an ongoing debate on why power rates are high. Apart from the policies of deregulation and privatization, Bayan has also maintained that the Value Added Tax contributes significantly to these high power rates,"Bayan secretary general Renato Reyes said in a statement. "Industry sources have informed us that the Arroyo government was able to collect more than P30 billion in VAT on generation and transmission from 2006-2007. Other sources have informed us that the Arroyo government may have collected more than P6 billion in VAT on distribution charges from Meralco service areas," he added. The VAT on power appears on Meralco electricity bills at different computations. Generation and transmission charges are pass-through charges so the VAT rates on these items are not computed at exactly 12%. The VAT on the distribution charge however is computed at 12% of all items under distribution. The generation, transmission and distribution rates are computed based on kWh consumption. Meralco sold around 25 billion kWh in 2006 and about 26 billion kWh in 2007. At 51 billion kWh sold for two years, and with a total VAT collection of P36 billion from the same period, that’s an average VAT of 70.6 CENTAVOS for every kWh, according to Bayan. “Another way of looking at it, take away the VAT and you will probably lower power rates by 70.6 CENTAVOS/kWh," Reyes said. Bayan cited a study by consumer group People Opposed to Warrantless Electricity Rates that said eliminating the VAT on power will save consumers of 200 kWh/month around P206 pesos. Those using 300 kWh/month will also save more than P470 pesos. “The savings from VAT will help families cope with the rising cost of living. It’s not true that they will tend to consume more electricity. They will in fact use the savings to buy food and other basic necessities," Reyes said. “If government is really serious in bringing down power rates, it can start with the VAT on power. That would be a fast and direct way of lowering rates. While Meralco should still be made to explain the other aspects of its rates, government can no longer play the innocent here. Government too is guilty of raising power rates," Reyes added. - GMANews.TV