Consumer groups urge President Marcos to axe taxes on electricity, fuel

MANILA, Philippines — Ahead of President Marcos’ third State of the Nation Address (SONA) on Monday, consumer advocacy groups have called for a review of tax policies on electricity and fuel amid soaring prices of basic goods and prime commodities.

Currently, electricity bills of household consumers carry a value-added tax (VAT) of 12 percent, which is a key revenue source for the government.

“As inflation continues to surge and the cost of living spirals upward, the government must reconsider tax policies that add to consumers’ financial strain,” CitizenWatch Philippines co-convenor Christopher Belmonte said over the weekend.

He said the government should conduct an immediate reassessment of the “oppressive impact” of VAT and excise tax on all fuels, which affect not only households but also businesses.

Citing a Pulse Asia survey in June, Belmonte said Filipinos want the Marcos administration to address issues on inflation, wages, employment and poverty reduction.

“Taxes on power and energy amplify this burden. Removing the VAT and excise taxes would provide much-needed relief to households and small and medium enterprises struggling with inflation,” he said.

According to Belmonte, these taxes are driving up production costs for businesses, which are often passed on to consumers, leading to higher prices for goods and services.

The impact was said to be particularly severe for low-income families and vulnerable populations, who are “disproportionately affected” by high electricity costs.

“We call on the President and our policy leaders to prioritize the ordinary Filipino consumer’s well-being and adopt a pragmatic and compassionate tax policy that, beyond providing cross-sectoral economic relief, can become the impetus for more investment to pump up the economy,” he added.

Similarly, Bantay Konsyumer, Kalsada, Kuryente (BK3) joined the call for the immediate abolition of electricity and petroleum taxes, urging Marcos to include this in his priority bills in his third SONA.

The group has also called on Congress to support the “immediate repeal of oppressive taxes on electricity and petroleum.”

By removing these taxes, BK3 secretary-general Patrick Climaco claimed that the step would help ease the burden on Filipinos, who are still grappling with the impact of the pandemic.

“If some think that a large tax will be lost to the Treasury, they will think that the removal of VAT on electricity and petroleum is greater than the tax collected by bureaucratic thieves. They have a lot of taxes that are not collected properly and are not fun,” Climaco said.

In July 2023, Sen. Francis Escudero filed Senate Bill 2301 that seeks to exempt electricity sales from VAT, further amending the National Internal Revenue Code.

Under the bill, the following transactions shall be exempt from VAT: the sale of electricity by generation, transmission and distribution firms and electric cooperatives; and the services of franchise grantees of electric utilities.

After over a year, the measure remains pending in the Senate.