Senator Kiko Pangilinan has introduced a legislative measure aimed at removing the value-added tax (VAT) on system loss charges in electricity bills, seeking to provide relief to Filipino households amid climbing utility costs.
Senate Bill No. 2124, titled the “VAT Exemption on Systems Loss Act for Residential Household Consumers,” proposes to amend the National Internal Revenue Code of 1997. If passed, it would categorize system loss charges as VAT-exempt transactions.
The senator emphasized that consumers should not be penalized for electricity that is lost before it even reaches their homes.
“Sobra-sobra na ang kahirapan na dinadanas ng ating mga kababayan. Hindi na dapat pa nila saluhin ang dagdag na pahirap ng VAT sa system loss charges, lalo na at ito naman ay wala sa kanilang kontrol,” Pangilinan said.
Pointing to Philippine Statistics Authority data, Pangilinan noted that essential utilities—including housing, water, and electricity—contributed significantly to the country’s 7.2% headline inflation rate, accounting for 23.2% of that figure.
“Isa na naman itong mahalagang hudyat na panahon na para pagtuunan natin ng pansin ang mga hakbang para mapagaan ang pasanin ng mga Pilipino,” he added.
The bill includes a safeguard requiring the Energy Regulatory Commission to monitor power firms, ensuring the VAT savings are not covertly recovered through other fees like distribution or wheeling charges.
Currently, consumers pay VAT on both their actual consumption and ancillary costs, a practice Pangilinan argues compounds the financial weight on citizens.
With the Philippines maintaining some of the highest residential power rates in Southeast Asia—surpassed only by Singapore—the senator urged his colleagues to prioritize the measure.
“Ang panukalang batas na ito ay tungkol sa pagiging patas, pananagutan, at pag-protekta sa ating mga mamimili,” he said.