Press Release
August 17, 2016

Bam: Lower the price of electricity

A senator has submitted a measure seeking to lower power rates by removing Value Added Tax (TAX) from the sale of electricity by all electric companies and cooperatives.

In his Senate Bill No. 670, Sen. Bam Aquino wants to make VAT-exempt the sale of electricity at all stages -- from generation, transmission, and distribution -- to lessen the expenses of Filipino families.

"A tax relief on electricity will result in significant savings for Filipino families as well as lower operating costs for businesses, from small restaurants and retail stores to large factories," Sen. Bam said.

The measure seeks to amend Section 108 (A) (II) and 109 (1) of the National Internal Revenue Code, as amended by Republic Act No. 9337, to cover sale, transmission and distribution of electricity from VAT-exempted transactions.

Among them are sales of electricity by generation, transmission and distribution companies and electric cooperatives and services of franchise grantees or electric utilities.

The senator is also eyeing to exempt from VAT the sale or importation of machineries and equipment, including spare parts, to be directly used by the buyer or importer in the generation, transmission and distribution of electricity

"We've been complaining about our expensive electricity for too long. Something must be done to bring down prices," Sen. Bam said.

The Philippines has one of the most expensive electricity costs in Southeast Asia, having the third highest tariffs for residential electricity whereas our neighbors' electrical distribution is heavily subsidized by their governments.

The lawmaker added that more than hindering foreign investment, high power rates add burden to average Filipino families that are already struggling to pay for other necessities such as water, food and gas.

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