A proposed measure in the Senate seeks to remove the value-added tax (VAT) on system loss charges in residential electricity bills in a bid to help ease the financial burden on Filipino households grappling with high power costs.
Senate Bill No. 2124, or the VAT Exemption on Systems Loss Act for Residential Household Consumers, aims to amend provisions of the National Internal Revenue Code to exempt system loss charges imposed by power distributors and electric cooperatives from VAT.
System loss charges refer to the cost of electricity lost during transmission and distribution due to technical and non-technical factors within the power grid.
The proposed measure argues that consumers should not be burdened with additional taxes on losses beyond their control.
“Sobra-sobra na ang kahirapan na dinadanas ng ating mga kababayan. Hindi na dapat pa nila saluhin ang dagdag na pahirap ng VAT sa systems loss charges,” Senator Francis Pangilinan said.
The proposal comes amid continuing concerns over rising electricity prices, which have contributed to higher inflation and increased household expenses nationwide.
Data from the Philippine Statistics Authority showed that housing, water, electricity, gas, and other fuels remain among the major contributors to inflation.
Under current billing practices, consumers pay VAT not only on their actual electricity consumption but also on additional charges, including system losses.
The measure also directs the Energy Regulatory Commission to ensure that savings from the VAT exemption are not passed back to consumers through other charges such as distribution wheeling fees or pass-through costs.
Residential electricity rates in the Philippines remain among the highest in Southeast Asia, adding to the financial strain on ordinary consumers.
Supporters of the measure said the proposal forms part of broader efforts to improve transparency in electricity pricing and reduce utility costs for Filipino households.
The bill also aims to promote fairness in power billing while helping consumers cope with rising living expenses and inflation.