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MILITANT
group Bagong Alyansang Makabayan (Bayan) said Friday
consumers may have been paying up to P4 billion to the
government in the form of the value-added tax (VAT) on
system losses of the Manila Electric Co. (Meralco) from
2006 to 2007.
Bayan
said businessman Jesus Arranza, president of the
Federation of Philippine Industries (FPI), earlier
called on the Department of Finance (DOF) to remove the
VAT on system loss, a component of the electricity bill
representing power lost to pilferage and inefficiency.
“It’s a
classic case of dumb and dumber. Government was wrong to
allow system losses to be passed on to consumers, much
more to have the amount subjected to VAT,” Renato Reyes
Jr., Bayan secretary-general, said.
He added
that the P4-billion VAT estimate was derived from a low
system-loss rate of P0.80 per kilowatt-hour (kWh)
multiplied by Meralco’s total sales of P24 billion a
year, with a VAT of 10.49 percent for two years.
“Lifeline-rate subsidies should not be taxed under the
VAT. Consumers are being made to subsidize other
consumers. Why should they be taxed for that? It’s
absurd, as well. The VAT on the franchise tax is also
equally absurd,” Reyes said.
Bayan
and the consumer group People Opposed to Warrantless
Electricity Rates (Power) are set to ask the Bureau of
Internal Revenue (BIR) and the DOF to disallow the
continuing collection of the VAT on system loss.
Reyes
said the groups are also seeking a refund of the
previous collections of VAT on system loss.
He added
that Bayan, Power and other consumer groups are also
preparing to take the matter to court if the BIR and DOF
do not act on the consumers’ complaint.
“If we
believe that the VAT on system loss is unjust and should
not have been included in the bill in the first place,
then a refund is in order. The estimated P4 billion
worth of VAT on system loss should be returned to
Meralco consumers in the form of lower rates or
discounts, perhaps from the state-owned Napocor,” Reyes
said.
The VAT
collections are presumed to have gone to the national
government, so consumer groups are asking the
government, to find a means to refund the amount
directly to electricity consumers.
“Other
customers of distribution utilities nationwide should
also start making their computations on how much VAT was
levied on system losses. These amounts should also be
returned to consumers,” Reyes said. The discounts, the
group said, could be charged against state-owned Napocor
in the form of lower generation rates.
“The
bigger fight would be the removal of system losses
altogether. This could further save customers by up to
P0.80/kWh in monthly rates,” said Bayan.
In a
similar development, Jesus Francisco, Meralco president
and chief operating officer, earlier said his company
has always wanted to point out they’re doing everything
they can to reduce system losses.
He
explained that when they go above the 9.5-percent cap
set by the power distribution code—the excess to the cap
becomes a cost to the company.
For
every percentage excess in the system-loss cap,
according to Francisco, it costs them probably billions
at today’s cost of power.
“So it
would be foolish of us not to go after pilferage, and
that’s why we spend P300 million for antipilferage
activities,” said Francisco.
The
Meralco official said they hope to bring down the level
of system loss this year.
“Any
benefit from going below 9.5-percent has to be passed
through to customers and the Energy Regulatory
Commission (ERC) is always looking at the company to
make sure that reduction in system losses are passed
through to consumers,” Francisco said. |
