‍MANILA, Philippines — Senator Bam Aquino is pushing for the removal of the 12% value-added tax on residential electricity to help lower monthly power bills for Filipino households.

Aquino said exempting residential electricity from VAT could provide consumers with greater relief, particularly if combined with measures addressing system loss charges, which account for around 5% to 6% of electricity charges.

“If we remove VAT from residential electricity — not from businesses and factories, but just residential — this could mean a bigger drop in the electricity bill of our citizens,” Aquino said during a recent Development Budget Coordination Committee briefing.

Aquino has filed Senate Bill No. 266, which seeks to exempt from VAT the sale of electricity by generation, transmission and distribution companies, as well as electric cooperatives.

The proposed measure would also exempt from VAT the services provided by franchise holders of electric utilities.

Aquino said removing the tax could lower electricity prices by eliminating the VAT cost currently passed on to consumers.

He has also filed Senate Bill No. 2047, which proposes reducing the general VAT rate on goods and services, including petroleum products, from 12% to 10%.

Separately, Aquino filed Resolution No. 375 seeking a Senate inquiry into a recent Manila Electric Company power rate increase and the system of cross-subsidies reflected in consumers’ monthly bills.

Aquino questioned why households that do not benefit from electricity subsidies are made to help shoulder discounts provided to low-income consumers, marginalized sectors and senior citizens.

He said these cross-subsidies may add around P20 to P100 per month to the electricity bill of an average household.

While assistance for low-income consumers should continue, Aquino said the cost should instead be funded by the national government through the budget rather than passed on to other electricity consumers.

The proposals remain pending in the Senate and would still need to go through the legislative process before any changes to electricity VAT rates can take effect.

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