Labor And Business Unite To Demand An End To Power VAT
- March 12, 2026
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Labor and business groups are urging President Ferdinand Marcos Jr. to certify as urgent a bill removing the 12 percent value-added tax (VAT) on electricity, warning that rising global fuel prices linked to Middle East tensions could drive higher power rates and broader inflation in the Philippines.
The Trade Union Congress of the Philippines (TUCP) renewed its call for the immediate certification of House Bill No. 6740, which seeks to scrap the 12-percent VAT on electricity to ease the burden on households and industries.
TUCP President and House Deputy Speaker Raymond Democrito Mendoza said the measure would provide immediate relief as Filipinos face the prospect of higher electricity and fuel costs.
“Mr. President, now more than ever, we should put an end to this extremely excessive taxation imposed on our extremely expensive power,” Mendoza said, urging the administration to act swiftly.
Business Groups Voice Concerns
Business groups have backed the proposal, including the Philippine Chamber of Commerce and Industry (PCCI), the Employers Confederation of the Philippines, and the Philippine Exporters Confederation. They argue that the tax adds pressure on businesses already struggling with some of the highest electricity costs in Southeast Asia.
PCCI Chairman Emeritus Sergio Ortiz-Luis Jr. said removing taxes on energy would provide broader benefits across sectors.
“Unlike other countries in the region, the Philippines not only does not subsidize fuel and electricity but also taxes these industries,” Ortiz-Luis said. “Removing excise taxes temporarily will benefit all sectors, rich and poor alike.”
The groups noted that reducing electricity costs could improve the competitiveness of local manufacturing, encourage expansion of production, and attract new investments that would generate jobs.
Rising Global Fuel Prices
The push to remove VAT on electricity comes as regulators warn that global fuel volatility may soon push power rates higher.
The Energy Regulatory Commission has cautioned that electricity prices could increase due to higher international costs of coal, oil, and liquefied natural gas (LNG), as well as tighter supply conditions in global energy markets.
Department of Energy Secretary Sharon Garin said electricity rates could rise by as much as 16 percent by April if global fuel prices continue to climb.
Manila Electric Co. (Meralco), the country’s largest power distributor, also warned that recent oil price surges triggered by conflict in the Middle East could affect consumers’ power bills in the coming months.
Meralco chairman and chief executive Manuel V. Pangilinan said the company is reviewing its fuel sourcing strategy as prices of coal, diesel, and LNG fluctuate.
Added Burden
Supporters of the bill argue that the Philippines’ electricity taxes have compounded already high power prices.
The Electric Power Industry Reform Act (EPIRA), enacted in 2001, aimed to ensure reliable and affordable electricity through industry restructuring. However, four years later, Republic Act No. 9337 amended the tax code to impose a 12-percent VAT on electricity, covering sales by generation, transmission, and distribution companies.
Labor groups say the policy results in consumers paying VAT not only on electricity they use but also on “system losses,” or power that never reaches them.
TUCP Vice President Luis Corral said removing VAT from electricity sales would provide immediate relief to workers and consumers while supporting job creation. “This is the better approach than the age-old palliatives and ayuda (aid),” he said.
Long-Term Risks
The debate over energy taxes has intensified as policymakers warn that global oil shocks could trigger broader economic pressures.
Former Bayan Muna Representative Carlos Isagani Zarate warned that escalating geopolitical tensions in the Middle East could push inflation higher in the coming months.
“Inflation at 2.4 percent today is just the beginning. Without structural intervention, the months ahead will bring price pain that no amount of presidential flexibility can address,” Zarate said.
He urged Congress to accelerate deliberations on House Bill 215, known as the “Presyo Ibaba Bill,” which proposes removing excise taxes and expanded VAT on fuel, electricity, water, tolls, and other essential goods.
Rising oil prices, Zarate noted, affect transport, food, electricity, and basic commodities, creating ripple effects across the economy. With the Philippines importing up to 95 percent of its petroleum needs, he warned that any disruption in the Middle East could expose the country to severe price spikes.
Energy-Saving Measures
Amid these concerns, the government has begun implementing energy conservation policies.
Malacañang issued Memorandum Circular No. 114 directing government agencies to reduce electricity and fuel consumption by 10 to 20 percent starting March 6.
Measures include maintaining air-conditioning thermostats at 24°C or higher, ensuring doors of cooled spaces remain closed, and adopting a four-day onsite workweek in government offices to reduce energy use.
Officials say the steps are intended to manage consumption and cushion the impact of possible increases in electricity prices.
Source:
https://newsinfo.inquirer.net/2193024/labor-group-certify-as-urgent-bill-removing-12-electricity-vat
https://tribune.net.ph/2026/03/05/phl-faces-price-spikes-action-urged
