Senator Bam Aquino has called on the Bureau of Internal Revenue (BIR) to evaluate scrapping the 12% value-added tax (VAT) applied to entire monthly power bills.
He pointed out that expanding the tax exemption beyond merely system loss charges would grant households significantly more meaningful relief from high energy costs.
According to the lawmaker, stripping the VAT solely from system loss expenses produces a negligible reduction of roughly 0.5% to 0.8% on electricity bills.
Conversely, extending the exemption to cover the total bill could slash power costs by an estimated 8% to 10% for a household consuming an average of 200 kilowatt-hours (kWh) per month.
This translates to potential monthly savings ranging between ₱237 and ₱296, or approximately ₱2,844 to ₱3,552 per year.
“Based on our study, the impact of removing VAT on systems loss is minimal—only around 0.8 percent. Our actual proposal is to remove the VAT from the electricity bill itself. This would result in a 10 percent discount or a 10 percent reduction in our electricity bills,” said Aquino, chairperson of the Senate Committee on Trade, Commerce, and Entrepreneurship.
Aquino asserted that removing the tax completely provides the actual economic relief citizens are seeking, far outstripping partial adjustments targeted at system losses alone.
“I believe that is the remedy our fellow citizens are really looking for. While such a proposal is good, the better solution is to remove the VAT from the entire electricity bill, not just from systems loss,” he added.
The senator re-emphasized his backing for Senate Bill No. 266, which he introduced on July 8, 2025, during the initial days of the 20th Congress.
The proposed legislation aims to designate power sales conducted by generation, transmission, and distribution entities—along with electric cooperatives—as VAT-exempt transactions to ease financial burdens on the public.
“If we remove the VAT on electricity, electricity bills will decrease, and Filipino families will have more money available for their daily needs—such as food, medicine, and students’ allowances and fare,” he added.
Aquino noted that the proposed tax relief would also benefit micro, small, and medium enterprises (MSMEs) by driving down operational costs and making the nation a more attractive destination for foreign investments.
“This will also reduce the electricity cost burden on our MSMEs and help attract new businesses to the country, which will create numerous jobs and strengthen our economy,” he stressed.
Under SB No. 266, energy sales from generation, transmission, and distribution power utilities, including electric cooperatives, would be categorized as VAT-exempt.
The measure would similarly eliminate VAT on service fees charged by electric utility franchise holders.