Marcoleta eyes VAT removal on power bills

Senator Rodante Marcoleta has filed a bill seeking to remove the 12 percent value-added tax (VAT) on electricity sales at all stages, including generation, transmission, and distribution, to lower electricity rates and ease the financial strain on Filipino households and businesses.

In filing the proposed measure, Marcoleta emphasized that the Philippines continues to have one of the highest electricity costs in Southeast Asia, a burden he said is being felt most acutely by ordinary consumers and small enterprises.

Marcoleta explained in his note that removing VAT on electricity sales would lower operational costs and ultimately lead to reduced power rates for consumers.

“The removal of VAT on electricity sales is likewise anticipated to relieve the financial strain on both consumers and enterprises, thereby supporting the development of a more inclusive and resilient energy system and improving the overall quality of life for Filipinos,” he stressed.

He added that cheaper electricity could help spur economic activity, increase household consumption, and support broader and more sustainable growth.

The senator, who ran on a campaign promise to lower power rates, said the current system burdens consumers with multiple inefficiencies in the energy sector. He cited several contributing factors to high electricity costs, including deregulated power generation, transmission bottlenecks, distribution losses, heavy reliance on imported fuel, and an unrealistic regulatory asset base.

“All these result in elevated operating expenses that deter investments, leading to high electricity costs that burden consumers,” he said.

Marcoleta also pointed out that the measure aligns with previous calls from the business community.

A year ago, the Philippine Chamber of Commerce and Industry urged Congress to scrap the 12 percent VAT on electricity sales from distributors to consumers, citing high power costs as a major concern for investors.

In 2024 alone, generation charges have climbed several times.

Households using 200 kilowatt-hours per month have seen an average increase of P0.1839 per kilowatt-hour, due mainly to higher prices at the Wholesale Electricity Spot Market (WESM) and more expensive power supply agreements, which Marcoleta dubbed as “sweetheart deals.”

WESM rates rose by P0.2531 per kWh due to tight supply, while Power Supply Agreements saw a P0.1050 per kWh increase due to a weakening peso.

“As the costs associated with power generation continue to rise, consumers may need to adjust their budgeting for electricity expenses and consider energy-saving measures,” said Marcoleta, who served multiple terms as Representative of SAGIP Partylist before winning in the Senate in the 2025 senatorial elections.