Manila: Senator Francis Escudero said Thursday that exempting electricity sales from the 12 percent value-added tax (VAT) is a targeted measure that differs from across-the-board tax cuts.

According to Philippines News Agency, Escudero stated in a news release that his proposal aims to ease power costs without undermining fiscal stability. The focus is on the power sector and should not be conflated with broader calls to reduce the VAT rate. Escudero emphasized that while broad tax cuts may strain government revenues, lifting the tax on electricity is a fiscally responsible choice. It strikes a balance between social equity and economic necessity, ensuring that families and industries experience relief without compromising the nation's ability to service its debt.

Escudero acknowledged earlier remarks by Executive Secretary Ralph Recto, who cautioned against reverting the expanded VAT rate to 10 percent due to the country's debt level. However, the senator emphasized that his proposal does not involve an across-the-board reduction. Senate Bill 476, currently pending before the Senate committees on ways and means and on energy, aims to exempt electricity sales from VAT. This includes transactions involving generation, transmission and distribution companies, electric cooperatives, and franchise grantees of electric utilities.

He noted that electricity prices in the Philippines are among the highest in Asia, contributing to increased costs of goods and services and placing pressure on household budgets and industrial operations. Earlier, other lawmakers also filed measures seeking relief from high power costs. Senator Rodante Marcoleta proposed removing the 12 percent VAT on electricity sales at all stages, citing the burden of power costs on consumers and businesses. Meanwhile, Rep. Nathan Oducado of the 1Tahanan Party-list filed a bill seeking to reduce the VAT on electricity from 12 percent to 6 percent, with safeguards to ensure the reduction is passed on to consumers.