Speaker Pantaleon D. Alvarez on Thursday said the House of Representatives would not allow the inclusion of the coal tax in the package known as the Tax Reform for Acceleration and Inclusion (TRAIN) as it would only increase the price of electricity.
The coal tax is among the contentious issues at the bicameral conference committee harmonizing the provisions of the respective versions of the House of Representatives and the Senate.
“We definitely will not allow the inclusion of the coal tax in the TRAIN,” Alvarez said in a radio interview on the controversial 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.
According to Alvarez, the industry players may not protest too much on the proposed tax on coal and urged colleagues in the legislature to “look at this objectively from the point of view of the consumers” because the industry players could simply pass on the added burden to electricity consumers.
Alvarez said one does not have to be a rocket scientist to understand that electricity prices would go up if Congress agrees to impose the new tax on coal and that such would create a ripple price-increase impact on goods and services.
“We should look at this from the perspective of consumers. We already have some of the more expensive electricity and certainly some of the most expensive in Asia. Now, we ought to lower the electricity rate and not raise it,” Alvarez said.
He added the past several months, he and Energy Secretary Alfonso G. Cusi held several meetings to discuss various ways of lowering power rates.
With this in mind, 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.
Alvarez finds it odd that some colleagues support a measure that could only push electricity rates higher.
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 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.