VAT on System Loss Charge Removed, Consumers to Benefit

MANILA, Philippines — The removal of the 12-percent value-added tax on allowable system loss charges in electricity will provide direct relief to consumers, Speaker Faustino “Bojie” G. Dy III said in a statement on Monday thanking President Ferdinand Marcos Jr. and concerned government agencies for acting quickly to bring down power costs. “Every peso we can save is a big help to our consumers,” Dy said. He added that the VAT removal was a “timely and necessary intervention” to ease the burden of electricity bills on Filipino households, which have been struggling with rising costs of living. The system loss charge is a component of the electricity bill that covers the energy lost during transmission and distribution. While it is a necessary charge to cover operational costs, its inclusion of VAT has been a point of contention for consumers. The Department of Energy (DOE) and the Energy Regulatory Commission (ERC) have been tasked to ensure the smooth implementation of the VAT removal and to monitor power distribution utilities to prevent any overcharging or unjustified price increases. The government hopes that this measure will help temper inflation and improve the purchasing power of Filipinos. This move comes amid broader efforts by the Marcos administration to address economic challenges and improve the welfare of its citizens. The Philippines has been grappling with high inflation rates, largely driven by global supply chain issues and rising commodity prices. Reducing the cost of essential services like electricity is seen as a key strategy to alleviate these pressures. Consumer groups have welcomed the decision, calling it a step in the right direction. However, they also urged the government to continue exploring other avenues to further reduce electricity costs, such as improving the efficiency of power generation and distribution, and promoting the use of renewable energy sources. The long-term sustainability of affordable electricity remains a critical concern for the nation.