PCCI, NEA buck planned hike in excise tax on coal

The Philippine Chamber of Commerce and Industry (PCCI) and the National Electrification Administration (NEA) have voiced their serious concern over the planned hike in the excise tax on coal.

PCCI president George Barcelon said in a position paper sent to reporters that any increase should be avoided since the country was already “poorly situated in terms of power costs competitiveness.”

The National Electrification Administration expressed a similar view and called on Congress to “review” moves to jack up the tax on coal as this would raise the cost of electricity, since coal accounts for close to half of power generated in the country.

In a statement, NEA administrator Edgardo Masongsong said that while the proposal to impose higher excise tax on coal will promote the development of renewable energy sources, he expressed concern that “this may cost the electricity consumers more.”

Last week, the Senate approved a version of the tax reform package that would result in the increase in the excise tax on coal from P10 per metric ton to P100 per ton in the first year of implementation, P200 per ton on the second year, and P300 per ton on the third year.

“Being already poorly situated in terms of power costs competitiveness, it is important to give priority to the prevention or avoidance of any cause that will increase the cost and diminish the quality of our power industry. In brief, any cause or policy that would not promote that premise must be avoided,” Barcelon said in the paper.

The NEA chief also noted that coal accounted for the biggest share of the country’s electricity generation mix.

According to the Department of Energy, the country relies mostly on coal-fired generators (43 percent), and also on natural gas (24 percent) and diesel-fired plants (7 percent).

“That [provision for a hike in the coal tax] should be reviewed by the [bicameral committee] so that they will be able to see what would be the impact if that will be pursued,” Masongsong said.

Barcelon said foreign and local investors see power quality and costs as “critical” factors that influence their decision to invest in the country.

“Many have left some years ago due to high and unpredictable power costs and policies,” he said.

Barcelon said any form of increase should be avoided altogether, dismissing claims that a hike in excise tax would have less impact on power costs when compared to other factors that could also influence an increase.

Isidro Consunji, chair and chief executive of Semirara Mining and Power Corp., meanwhile, called the provision “discriminatory” as the bill didn’t apply the same treatment to other fuel options.

The company’s shares in the local bourse dropped last week amid news about the Senate-approved higher coal excise tax.

The planned increase in the coal excise tax was part of the government’s tax reform initiative being finalized in Congress.

The initiative aims to lower personal income taxes and offset the revenue loss by hiking consumption taxes, among other measures.

There are two different versions of the package passed in both chambers of Congress, with the bill in the lower house not featuring any coal excise tax.

Lawmakers, through a bicameral conference committee, are expected to iron out their differences before yearend.