To address the ongoing increase in energy prices, specifically petroleum and electricity, Senate President Pro Tempore Ralph Recto has put forward a new bill in the Senate. 

The measure, Senate Bill 2440, will seek to lower electricity and petroleum costs by reducing the excise tax on petroleum products and coal by 50%, suspending the imposition of importation duties, and exempting the system loss charge in electricity bills from value-added tax (VAT) for three years.

According to Recto, the application of VAT and excise tax is burdening consumers, especially during the current health crisis. 

“The imposition of VAT and the increased excise taxes on petroleum products and coal are too much of a burden on the consumers and businesses during this time of the COVID-19 pandemic,” Recto said.

“As a mitigating response, it is high time to reduce the excise tax on these products by 50%, suspend the applicable duties, and exempt the system loss charge from VAT, thereby effectively lowering the prices of electricity and consequently other basic goods and services,” he explained further. 

Apart from the reasons mentioned above, Recto also identified the Tax Reform for Acceleration and Inclusion (TRAIN) Law as one of the factors that are driving inflation of energy prices. 

“It was intended to finance at least partially the Build, Build, Build Program and other social services of the government. However, it imposes additional excise tax on petroleum products and coal, and just like the VAT, it has the effect of increasing the prices of goods and services,” Recto said.

The TRAIN Law was put into motion in January of last year and has significantly increased the excise tax of both coal and gasoline. 

Gasoline was increased from P4.25 to P10.00, zero to P6.00 for diesel, zero to P5.00 for kerosene, per liter of volume capacity. Meanwhile, the excise tax on coal went from P10.00 to P150.00 per metric ton.

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