Marcos' VAT Cut on Electricity Bills Limited to Systems Loss Charge

MANILA, Philippines — Energy Secretary Sharon Garin clarified on Tuesday that President Marcos Jr.'s call for amendments to the Electric Power Industry Reform Act (EPIRA) during his fifth State of the Nation Address (SONA) on Monday was specifically referring to a value-added tax (VAT) cut on the systems loss charge. Garin explained that the proposed amendment would remove the 12% VAT imposed on the systems loss component of electricity bills. This means the VAT reduction would not apply to the total electricity charges consumers pay, but only to the portion attributed to systems loss. The clarification comes after President Marcos Jr. urged for amendments to EPIRA, which had led to expectations of a broader relief for consumers struggling with high power costs. While the move aims to alleviate some burden, the limited scope of the VAT cut may fall short of widespread consumer expectations. Systems loss refers to the electricity that is lost during transmission and distribution. The cost of this loss is typically passed on to consumers as part of their electricity bills. By targeting the VAT on this charge, the government seeks to provide some financial relief without impacting its overall revenue significantly, as VAT is a major source of government income.