Senate President Chiz Escudero is pushing a proposal to exempt electricity sales from the 12% value-added tax (VAT), framing the measure as a targeted form of relief for households and businesses struggling with rising costs. Unlike broad tax cuts, Escudero argues that removing VAT on electricity directly addresses one of the biggest drivers of inflation without severely straining government revenues.

Under Senate Bill No. 476, the VAT exemption would apply to electricity generated, transmitted, and distributed by power companies and cooperatives, including services rendered by franchise holders. The bill is currently pending before the Senate Committees on Ways and Means and Energy.

Escudero’s proposal comes amid warnings from economic managers about the risks of rolling back the Expanded VAT rate across the board. In response, he clarified that his measure is narrower by design—focused on electricity, a basic necessity that affects nearly every household and business. According to Escudero, this approach balances social equity with fiscal responsibility.

Electricity prices in the Philippines remain among the highest in Asia, contributing to higher production costs, rising prices of goods, and pressure on family budgets. By reducing power costs, the proposal aims to create a cascading benefit: lower utility bills, more affordable basic goods, and improved competitiveness for local industries.

Supporters say the plan functions as a direct anti-inflation measure at a time when consumers are already absorbing increases in food and transportation costs. Critics, however, stress the importance of careful implementation to ensure that savings are actually passed on to consumers and not absorbed elsewhere in the system.

📖 “Give to everyone what you owe them.” — Romans 13:7

As lawmakers deliberate, the public conversation centers on a familiar question: can targeted tax relief provide real, immediate help without undermining long-term fiscal stability? The answer will depend not only on passage, but on execution—and on whether lower taxes translate into lower bills at home.