Former Interior Secretary and senatorial aspirant Benhur Abalos Jr. is advocating for the removal of the Value Added Tax (VAT) on electricity, emphasizing that high power costs are a significant barrier to investment and economic growth.
“The Philippines has the second-highest electricity rates in Asia,” Abalos pointed out. “For investors looking to establish manufacturing plants or car production facilities, electricity expenses play a crucial role in their decision-making.”
In an Inquirer.net report, Abalos explained that expensive power rates have a domino effect, raising costs for water utilities, transportation, and consumer goods. “Kung mataas ang kuryente, tataas ang tubig, tataas ang commodities,” he said, adding that the high cost of electricity discourages manufacturing investments due to increased overhead expenses.
Abalos has been a long-time critic of VAT on electricity. As a congressman during the 13th Congress, he opposed its imposition, arguing that it would worsen inflation and add to the financial burden of Filipinos. Following the passage of the expanded VAT law, he filed a resolution calling for a temporary suspension of VAT on petroleum and electricity.
He reaffirmed his commitment to this cause during a campaign rally in Victoria, Negros Occidental. “Hanggang sa tumanda ako, gagawin ko ito. Tututulan ko ang VAT sa kuryente para bumaba ang pagbayad natin sa kuryente,” he declared.
The Philippine Chamber of Commerce and Industry (PCCI) has also echoed Abalos’ stance, urging the government in 2024 to remove VAT on electricity, citing its impact on business competitiveness.
While acknowledging the potential revenue loss, Abalos argued that economic expansion would compensate for it. “If we lower or completely remove VAT on electricity, businesses will grow, and employment opportunities will expand,” he explained. “What we sacrifice in tax collection from electricity, we will more than make up for through increased investments, manufacturing growth, and job creation.”
Beyond tax reforms, Abalos is also pushing for greater use of renewable energy sources to stabilize supply and further reduce electricity costs.
