DOF drops proposal to suspend imposition of VAT on power use

MANILA, Philippines — The  Department of Finance (DOF) has rejected a proposal to suspend the imposition of value-added tax (VAT) on power consumption as the country grapples with the COVID-19 pandemic.

During the Joint Congressional Energy Commission (JCEC) hearing Friday, Senator Risa Hontiveros informed officials of the recommendation of the Senate Tax Study and Research Office (STSRO) to suspend the imposition of VAT until such time that Filipinos have recovered from the impact of the heath crisis.

But DOF Undersecretary Bayani Agabin said suspending VAT collection would not be a “good option at this time because it gives funds.”

 “The VAT po it’s (VAT is) actually a progressive tax because those who use electricity more will be paying more VAT,” Agabin said.

“So for income reasons and for progressive taxation reasons, we believe it is not a good idea to suspend the collection of VAT this time,” he added.

Department of Energy (DOE) Secretary Alfonso Cusi likewise said the government could use all the funds it could collect to augment the government’s budget for its COVID-19 response.

“Napakahirap pong tanong dahil ang atin pong pamahalaan, ang ating pong bansa ay kailangang-kailangan po ng pera para suportahan po iyong laban natin sa COVID-19, naghahanap po tayo, tulong-tulong po tayong lahat sa paghahanap kung papano po mapa-fund ‘yung ating mga requirements,” Cusi said. 

(It’s a difficult question because our government, our country badly needs money to support our fight against COVID-19, we are looking, everybody is working together to find ways to fund our requirements.)

“So napakahirap po siguro kung ngayon tayo magsu-suspend po ng VAT; baka wala na po tayong mapagkunan ng pera,” he added.

(So, maybe it’s difficult if we suspend VAT now; we might have no more to draw money from.)

To provide relief to consumers amid the health crisis, the Energy Regulatory Commission (ERC) earlier allowed staggered payment of electricity bills that had fallen due during the enhanced community quarantine (ECQ).

ERC said it would also order a six-month staggered payment of electricity bills for “targeted” consumers under the modified enhanced community quarantine (MECQ).

Based on the Inter-Agency Task Force (IATF) for the Management of Emerging Infectious Disease Resolution No. 37, Cebu City and Mandaue City will still be under ECQ until May 31.

Meanwhile, eight other high-risk areas will be under MECQ until the end of the month including Metro Manila, Bataan, Bulacan, Nueva Ecija, Pampanga, Zambales, Angeles City, and Laguna.

The latest figures from the Department of Health showed that 13,597 people in the country have COVID-19 as of May 22. This includes 3,092 recoveries and 857 fatalities.

KGA