Lawmakers Push Tax Relief, Lower Power Costs in Philippines

LAWMAKERS have filed several measures seeking tax relief for workers and micro, small and medium enterprises (MSMEs), lower electricity costs for consumers and stronger environmental protection as Congress begins tackling reforms following President Ferdinand R. Marcos, Jr.’s fifth State of the Nation Address (SONA). In separate statements on Monday, Marikina Rep. Marcelino “Marcy” R. Teodoro said he filed House Bills (HBs) No. 10461, 10462, 10463 and 10464, proposing to abolish system loss charges and value-added tax (VAT) on undelivered electricity, raise the annual income tax-exempt threshold to P500,000, boost protection for trees and urban forests and exempt micro and small corporations from the minimum corporate income tax. HB No. 10461 or the proposed Electricity Consumers’ System Loss Relief Act of 2026 seeks to prohibit distribution utilities and electric cooperatives from charging consumers for electricity lost in the distribution system and from imposing the 12% VAT on such losses. “Consumers should only pay for the electricity they actually receive and use,” Mr. Teodoro said. “It is fundamentally unfair to make Filipino families shoulder the costs of electricity that never reached their homes, and even more unjust to impose VAT on that undelivered electricity.” The bill classifies prudent system losses as operating expenses recoverable only through the Energy Regulatory Commission’s rate-setting process, subject to efficiency standards and loss-reduction targets. Meanwhile, HB No. 10462 or the proposed Middle-Class Tax Relief and Inflation Protection Act seeks to double the annual income tax-exempt threshold to P500,000 and requires income tax brackets to be adjusted every three years based on inflation. HB No. 10463 or the proposed Tree Preservation and Urban Forest Protection Act requires government agencies, local government units, contractors and private developers to exhaust all reasonable engineering and design alternatives before mature trees can be cut. It also requires the planting of at least 100 indigenous trees for every tree lawfully removed. HB No. 10464 seeks to exempt micro and small corporations from paying the 2% minimum corporate income tax beginning Jan. 1, 2027. “Micro and small enterprises are the backbone of our economy,” Mr. Teodoro said. “They create jobs, fuel innovation, and keep local communities thriving.” A similar proposal has been filed in the Senate. Senator Mark A. Villar has introduced Senate Bill No. 2362, which also seeks to exempt MSMEs from the minimum corporate income tax by amending the National Internal Revenue Code. “By reducing their potential tax burdens, MSMEs will be able to strengthen their resilience and expand their contribution as vehicles for expanding the middle class and achieving socioeconomic equality,” Mr. Villar said in the bill’s explanatory note. Citing Trade department data, he said MSMEs, which accounted for 99.63% of registered businesses in 2024, continue to face rising operating costs, including higher energy prices. “These challenges have been exacerbated by the recent national energy emergency, which led to a 7.2% inflation rate in April 2026, further constraining the growth and competitiveness of MSMEs,” he said. The proposals are among several tax measures filed after Mr. Marcos called for income tax relief, energy tax reforms and tax amnesties during his SONA, while highlighting the Bureau of Internal Revenue’s one-time tax abatement program for microentrepreneurs. — Pexcel John Bacon and Kaela Patricia B. Gabriel