Even if the value-added tax (VAT) is removed, government could still expect double or triple in revenues once VAT is scrapped on power rates, which could be enticing to investors, a House leader said on Monday.
House Committee on Ways and Means chair Rep. Romero “Miro” Quimbo of Marikina City said that the government should look forward into the influx of investments because of lower power rates when VAT is removed.
“Do not look that the government will lose some P30 billion in taxes but look forward for the investments that will come in because of the lower power rate,” Quimbo said. “More investors mean more jobs. More jobs mean more revenues. More revenues mean more government projects.”
According to Quimbo, once investors capitalize in the Philippines, the country’s unemployment rate—which stands at 7.3 percent or 2.99 million Filipinos—will decrease.
The lawmaker is also looking into the possibility of implementing a fixed franchise tax scheme on power companies. Currently, of the three stages of power production—generation, transmission, and distribution—generation and distribution phases are imposed with 12 percent VAT, which makes a consumer pay a total of 24 percent.
If the said tax will be eliminated, it will reduce the power charges with 85 cents to P1 per kilowatt hour.
Meanwhile, Quimbo also assured the people that a revised Electric Power Industry Reform Act (Epira) will be passed within the 16th Congress.
“EPIRA Law is not bad per se. There is no doubt that the new law will be passed because we are aiming to lower the cost of electricity. There are some provisions needed to be amended and there are some new provisions needed to be incorporated,” Quimbo told reporters.
He said that they are eyeing to prohibit the cross-ownership provision, wherein power distributing companies will be banned from owning generation companies or vice versa.
House Bill 3676 authored by Eastern Samar Rep. Ben Evardone seeks to ban cross ownership to prevent collusion among energy market players is currently pending for first reading. JHOANNA BALLARAN