Trade group bucks hike in coal tax

The Federation of Filipino-Chinese Chambers of Commerce and Industry (FFCCCII) is seeking to remove the provision in Senate-approved first tax reform package that will raise the tax slapped on coal.

“We would like to raise our concern on the proposed tax measure increasing the tax on coal from P10/metric ton to P100/MT in 2018, P200/MT in 2019 and P300/MT in 2020 incorporated in the Senate version of the Train [Tax Reform for Acceleration and Inclusion]. We believe that the imposition will dampen the country’s economic growth and would be detrimental to the consumers,” FFCCCII president Domingo H. Yap said in a Dec. 4 letter to Sen. Sonny Angara, who cochairs the bicameral conference committee on tax reform.

“Based on various computations, the proposed increase in coal tax would raise the average electricity rates of households from P28 to P36 depending on the consumption per month. A higher tax on coal would not only have a direct adverse effect on the electricity cost of households but would also increase the cost of living,” the FFCCCII said.

Also, the tax will certainly raise the cost of power in businesses and industries who most likely will pass it on to consumers, which would lead to a higher inflation rate and it is the poorest of our countrymen who will be most affected by such increase, the FFCCCII added.

“Furthermore, the coal tax increase would serve as a disincentive to invest in the country. The high cost of power will become a factor why it will be less attractive to invest in the Philippines. We note that one of the main indicators why the Philippines’ competitiveness remains problematic is its record of having one of the highest costs of electricity globally,” according to the FFCCCII.

As locally generated energy becomes more expensive, different industries may resort to importing products at cheaper prices or relocating their manufacturing plants abroad rather than producing the goods in the country. This will take away opportunities for job creation needed by the economy and may even lead to loss of jobs for many of our countrymen, the FFCCCII explained.

“Moreover, the increase in tax for coal will not only affect the power industry but also other industries who rely on coal as their fuel such as the cement industry, steel, paper, aluminum, chemical and pharmaceutical industries. The increase in tax for coal will negatively impact these industries increasing the cost of production which will in turn affect the economy and consumers,” the FFCCCII said.

“While we support other energy sources such as renewable energy in order to achieve environmental sustainability, we believe that there is clean coal technology to address the environmental impact of using coal as fuel,” according to the FFCCCII. —BEN O. DE VERA