DOE Supports Electricity VAT Relief As Lawmakers Push Lower Power Costs
- May 7, 2026
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The Department of Energy (DOE) has expressed support for proposals to suspend, reduce, or remove the value-added tax (VAT) on electricity, saying the measure could help ease the burden on consumers, although it stressed that any tax adjustment must undergo careful review to avoid adverse effects on government revenues and public services.
Energy Secretary Sharon Garin said the agency supports initiatives aimed at lowering electricity prices, including proposals to reduce or eliminate VAT on power bills.
“Suportado ng DOE ang lahat ng layunin na naglalayong mapababa ang presyo ng kuryente sa bansa, kabilang dito ang pag-aaral na bawasan o alisin ang VAT sa kuryente,” Garin said in a Facebook post. (Lowering electricity costs remains a primary mandate of the DOE, including studying the possibility of reducing or removing VAT on electricity.)
She acknowledged that removing VAT would lower electricity rates, but emphasized that the proposal is ultimately under the jurisdiction of economic managers and Congress because of its wider fiscal implications.
Fiscal Sustainability
In a separate statement, the DOE said lower electricity prices would benefit both households and businesses, particularly with the rising economic pressures and elevated fuel costs linked to tensions in the Middle East.
However, the agency emphasized that any VAT-related measure “must be carefully studied” to ensure that the intended savings are fully passed on to consumers and do not compromise the government’s capacity to deliver essential services.
“Removing or adjusting VAT on electricity therefore requires a thorough evaluation of how these changes will flow through the entire supply chain, and whether the resulting savings will be fully and directly felt by consumers at the household and business level,” the agency said.
The DOE added that while tax policy falls under the mandate of the Department of Finance (DOF) and Congress, it is prepared to provide technical guidance on the potential effects of proposed tax measures on the energy sector.
“The Department stands ready to provide technical inputs on the energy-sector impact of any proposed measure, in support of a whole-of-government approach that protects both consumer welfare and fiscal sustainability,” it said.
Senate Push To Trim Electricity Charges
The DOE’s statement came after Sen. Risa Hontiveros filed Senate Bill No. 2076 seeking to exempt system loss charges from VAT.
The proposed measure seeks to amend the National Internal Revenue Code to remove VAT on charges passed on to consumers due to power losses incurred during electricity transmission and distribution.
The proposal was filed amid concerns over rising electricity bills during the dry season, when higher temperatures typically drive up power demand and generation costs.
The DOE reiterated that improving affordability in the power sector should not rely solely on tax adjustments, but also on long-term reforms aimed at increasing efficiency and competition in the industry.
These include improving power generation efficiency, strengthening grid reliability, promoting responsible energy use, and enhancing market competition to ensure a more stable and affordable electricity supply.
Other Relief Measures
As part of broader efforts to cushion the impact of global oil price volatility and economic pressures, the Department of Budget and Management (DBM) has directed government agencies to identify unused funds that may be tapped for relief programs.
Under National Budget Circular 603, agencies were instructed to identify unobligated allotments under the 2025 continuing appropriations that may be declared as savings during the ongoing national energy emergency.
Government departments, state universities and colleges, and government-owned and controlled corporations have until May 15 to submit reports on funds that can no longer be utilized.
Budget Secretary Rolando Toledo earlier said the government expects cost-saving measures to generate between ₱12.8 billion and ₱25.6 billion from March to December 2026, depending on agency compliance levels.
The DBM has earmarked around ₱238 billion for oil crisis response measures. The agency also reported the release of ₱43.18 billion through the Department of Social Welfare and Development to support financial assistance, food aid, pensions, and livelihood programs for vulnerable sectors affected by rising costs.
Of the amount, ₱36.87 billion was allocated for protective services for individuals and families in difficult circumstances, while ₱810 million was set aside for the Sustainable Livelihood Program.
Source:
https://www.philstar.com/headlines/2026/05/06/2525930/doe-supports-vat-reduction-electricity
