No Law Needed to Stop VAT on System Loss, Ex-Lawmaker Tells House Panel

A former lawmaker has asserted that no law is needed to stop power companies from imposing Value-Added Tax (VAT) on "system loss" charges included in electricity bills. During a House committee hearing, former congressman Lawrence Colmenares argued that consumers are being unfairly burdened by this tax. Colmenares explained that system loss, which represents electricity lost during transmission and distribution, is not a service or product that consumers technically purchase. Therefore, he stated, it should not be subject to VAT under the National Internal Revenue Code, as there is no specific law mandating VAT on system loss. In response, Energy Regulatory Commission (ERC) Chair Francis Saturnina Juan cited Republic Act 7832, the Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994, and its subsequent revision, the Electric Power Industry Reform Act (EPIRA), as the basis for the current system regarding system loss. However, Colmenares countered by quoting EPIRA, emphasizing that "nothing in this act shall impair the authority of the ERC to reduce or phase out technical or design losses as a component of system loss." He stressed that the ERC itself possesses the authority to address and mitigate system loss, rendering new legislation unnecessary. This issue directly impacts the cost of electricity for Filipino households, a significant concern given the current economic climate. Consumers are looking for greater transparency and fairness in electricity billing. Information Source: GMA Money Philippines