Power bills to recharge economy – JPE

PHILIPPINES NEWS SERVICE — Senate President Juan Ponce Enrile believes that two reform measures he filed will stimulate the economy and rescue the public from the burden of high electricity rates.

Enrile said the Ways and Means committee under Sen. Panfilo Lacson and Energy panel under Sen. Gregorio Honasan will conduct a joint hearing next week to ensure the passage of SB 3147 and SB 3148.

The Senate president said excessive government taxes on indigenous sources of energy like natural gas and a layer of other taxes on power distributors are the reasons why power rates here are higher than in Japan and other Asian countries.

SB 3148 seeks to reduce to three percent the government’s royalty on natural gas which currently stands at a whopping P1.46/kWh of generated electricity.

“If taxes and royalties were to be removed on both indigenous and imported fuels, the rates of electricity generated using indigenous energy resources would be ubstantially lower,” Enrile said. For customers of the Manila Electric Company, this would translate to a reduction of at least P0.50/kWh in their monthly billing.

SB 3147 also aims to lower the franchise tax to three percent on gross distribution income of the power utility firms in lieu of all other taxes, duties and fees.

“Under the present system where the power industry players are required to pay ordinary income tax as well as the 12% EVAT, consumers are placed at a disadvantage as the energy companies simply pass on the cost of paying these taxes to the end-users,” Enrile explained.

Aside from giving relief to millions of electricity consumers, he said the twin proposals will also help stimulate economic activity, especially in the electronics sector, which is among the biggest users of electricity.

“If the economy recovers because of the cheap price of electricity, then the government can expect to also recover in less than two years the expected revenue losses from income tax and EVAT from new sources other than from power distribution companies,” he said.