Lawmaker urges ERC to suspend increases, House to cut VAT

PARTYlist representative Teddy Casiño urged the Energy Regulatory Board (ERC) to suspend any power rate hike while people in Luzon are still recovering from last week’s massive flood.

The lawmaker also called on Malacañang and the House leadership to immediately approve measures removing or reducing the value added tax (VAT) on electricity in order to prevent government from collecting windfall VAT revenues.

“Meralco’s increase plus the succeeding increases in the price of electricity due to higher generation costs, universal charges and currency exchange rate adjustments will result in unfair and immoral windfall VAT revenues unless we remove or reduce the tax,” said Casiño.

Windfall VAT is the additional revenues collected by government from unplanned increases in the prices of goods and services subject to VAT. Casiño said the VAT windfall is “an added misery to Filipinos already subject to artificially high prices of power and oil.”

The latest increase brings to P6.74/KwH the price of electricity in Meralco areas, translating to an additional monthly burden of P28 for households consuming 100 kWh/month and P56 for those consuming 200kWh/month. Households consuming 300 kWh and 400 kWh monthly will have to pay an additional P84 and P112, respectively.

“Maski kadaraan lang ng delubyo e magtataas na naman sila ng singil samantalang kakataas lang naman din nila nung nakaraang buwan,” said Casiño.

Meralco explained in a statement that the increase in the generation charge this month was the result of the eight-day shutdown of the Malampaya gas pipeline, which affected one-third of the total power supply in Luzon in July.

“This should not be happening if shutdowns and clean-ups are carefully coordinated and timed so as not to affect power rates. The ERC should suspend any increase for the sake of the flood victims and scrutinize line by line, centavo by centavo the proposed rate hike even if it is supposed to be an automatic increase,” he stressed.

“I am also calling on Malacanang and the House leadership to approve House Bill 6416 which aims to cut VAT rates by half in the prices of oil, power and water,” added Casiño.

Casiño’s bill aims to reduce VAT to 6 percent for electricity, water services, and oil and petroleum products, in order to provide immediate relief to consumers and the domestic economy. The 50 percent reduction of the VAT rate will bring down prices of oil products by as much three (3) pesos per liter, electricity rates by at least 38 centavos per kilowatt hour (kWh) for lifeline electricity users and at least 50 pesos in the bills of residential water users.

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