Enrile resurrects bill exempting electricity users from VAT

(DOE Seal)

(DOE Seal)

MANILA  (Mabuhay) – Senate Minority Leader Juan Ponce Enrile has recently resurrected his pet bill exempting the sale of electricity to residential consumers with consumption not exceeding 250 kWh from the Value Added Tax (VAT).

Senate Bill Nos. 2547 and 2159 respectively, pushing the same exemptions, were filed by Enrile during the 14th and 15th Congresses, respectively.

During the 2010 senatorial elections, Enrile campaigned under the banner of “Gusto ko Happy Ka!, advocating lower price of electricity.

In Senate Bill No. 2101, Enrile said that prior to the enactment of Expanded Value Added Tax Law, the cost of electricity in the Philippines was already one of the highest in Asia and the imposition of VAT on power further increased the cost.

“The bill is limited to exempting residential users or households only because households cannot avail of output of VAT to mitigate their VAT liability unlike industries, and business and commercial establishment which could pass on the cost of electricity to the user of their service,” Enrile said.

According to the Department of Energy (DOE), residential consumers or household would have to shell out additional 0.592 centavos per kWh due to the imposition of VAT.

“If a household consumer an average of 250 kWh per month, household members would be able to save P148 in electricity payment if VAT is removed, a rather substantial amount especially to those who belong to the lower middle income bracket and below,” Enrile said.

Lastly, Enrile said, household are also the last point in the VAT claim so the exemption will not adversely affect VAT collection efficiency in terms of establishing paper trail of “VATable” transactions.

“The measure aimed to amend Section 109 of the National Internal Revenue Code of 1997,” Enrile said. (MNS)

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