THE House of Representatives will not support the hiked coal tax included in the proposed Tax Reform for Acceleration and Inclusion (TRAIN).
In an interview, House Speaker Pantaleon Alvarez said they are against the coal tax because this will definitely increase the price of electricity.
The coal tax is among the contentious issues in the deliberation of the bicameral conference committee which is reconciling the House of Representatives and the Senate versions of the TRAIN.
“Hindi po namin papayagan yan, definitely hindi,” Alvarez said when asked for the stand of the House of Representatives on the coal tax.
The Senate approved a 3,000-percent increase in coal taxes to be collected in three tranches until 2020, which means the current P10 excise tax will be raised to P100 in 2018, P200 in 2019 and P300 by 2020. No such tax is included in the House version of the TRAIN.
“Let us look at this objectively from the point of view of the consumers. Dahil pagka halimbawa pinatawan mo ng additional taxes itong coal powered plants, yung industry players maaaring hindi magre-reklamo yan kasi ipa-pass on lang yan doon sa consumers,” Alvarez added.
Alvarez said it would not take a rocket scientist to know that electricity prices would go up if Congress agrees to impose the new tax on coal and that this would create a ripple effect of price increase in goods and services.
“Ang tinitingnan natin dito yung kapakanan ng consumers. Kasi mataas na ang kuryente natin, tayo ang isa sa mga pinakamataas sa Asia. Ngayon ang layunin nga natin dito paano natin pababain. Eh eto dadagdagan mo na naman ng buwis yan eh di tataas yan,” he also said.
The House leader said that for the past several months he and Energy Secretary Alfonso Cusi held several meetings to discuss various ways of lowering power rates.
In line with such objective, the House recently approved on third and final reading House Bill 1616 exempting the system loss charge component in the sale of electricity by distribution companies and electric cooperatives from the coverage of the value added tax (VAT).
System loss is the part of one’s electric bill representing the cost of electricity lost during transmission, pilferage, and due to technical and administrative inefficiency, which is passed on to the consumers. Under existing laws it is also subject to VAT, which further drives electricity bills up.
Apart from the expected hike in electricity rates, the coal tax would also hinder the growth of the country’s manufacturing sector.
Alvarez also stressed that the Senate insertion of the coal tax in the TRAIN runs counter to the constitutional mandate that all revenue measures must originate exclusively from the House of Representatives.
It is worth noting that more than 50 percent of the rate component in the electric bill accounts for the generation charge – wherein the fuel for power generation such as coal, gobbles up bulk of the cost.