Electric co-ops to protest VAT Law with power shutdown

The Association of Philippine Electric Cooperatives Party-List (APEC Party-List) will hold a five-minute power shutdown on June 12 to protest the passage of the expanded value-added tax (VAT) which included the electric cooperatives.

The party list group has expressed disappointment over the ratification of the VAT measure, which subjects the electric cooperatives to the VAT.

With this, it said it would call on the 6.6 million electric cooperatives consumers to undertake a five-minute power shutdown on June 12, 2005 at 7 o’clock in the evening to demonstrate their opposition to the VAT.

"The passage of the new VAT Law will impact negatively on the 6.6 million, mostly poor, rural households which own the 119 electric cooperatives," said APEC Party-List Representative Edgar L. Valdez.

According to Rep. Valdez, the effect of the VAT on electricity consumers is to bring up the power rates by 10 percent this year, and by 12 percent next year, or an effective increase of 56 centavos per kwh to 86 centavos per kwh depending on the franchise area, which will only exacerbate the country’s social crisis.

APEC also expresses its belief that the administration’s plan to increase the lifeline rate will not alleviate the financial difficulties that the rural poor will face as a result of the power rate increases due to VAT.

"The administration’s call to increase the lifeline rate is an illusory solution, as those just one or two levels above the lifeline rates are equally poor as those below the lifeline rates. Moreover, government is not subsidizing the poor through the lifeline rates as the lifeline rates for the poor are actually being subsidized through higher rates for those consumers whose consumption level is above the lifeline rates," APEC Representative Ernesto C. Pablo said.

APEC also questioned the new VAT laws exempting the large, corporate for-profit private utilities such as Manila Electric Co. (Meralco), Visayan Electric Corp., and Davao Light and Power from franchise taxes while at the same time the non-profit, poor, rural electric cooperatives are still subject to local franchise taxes.

"We see no reason why the large corporate utilities earning billions of pesos a year and which are not subject to consumer oversight are favored over the democratically controlled consumer-owned electric cooperatives," said another APEC Party-List Representative Sunny R.A. Madamba.

The call for a power shutdown intends to put all these issues to the fore and to convince the Arroyo administration that the untimely imposition of VAT on electric cooperatives will only bring further suffering to the Filipino people.

The APEC and the electric cooperatives are now undertaking a nationwide campaign to mobilize the consumer households to shutdown power on Independence Day.

A similar power shutdown as a form of protest was conducted by the electric cooperatives in the late 1990s to protest Napocor rates and in May 2002 to protest the purchased power adjustment (PPA).