Compromise coal tax to hit consumers hard — Gatchalian

MANILA, Philippines — The compromise on coal excise tax, while lower, will still hit consumers hard since this is a pass-on charge included in electricity rates, industry players said yesterday.

The Senate and House of Repre-sentatives ratified the Tax Reform for Acceleration and Inclusion (TRAIN) bill Wednesday night, including a compromise tax rate of P150 per metric ton on coal divided into tranches over the next three years once enacted.

This means the excise tax would be P50 per metric ton in 2018, P100 in 2019, and P150 in 2020 compared with the original Senate version proposal of a “100-200-300” hike scheme.

Senator  Sherwin Gatchalian, who chairs the Senate Energy Committee,  said the excise tax would become a “pure pass-on charge” resulting to an additional P13.2-billion in electricity costs that consumers inevitably would have to shoulder.

He said the tax hike “would result in an average monthly rate increase of P14.348 for a 200 kilowatt-hour (kwh) household served by a 100 percent coal contracted distribution utility. This is equivalent to the price of half a kilogram of rice for 2.7 million households.”

Power generators also agreed that consumers would feel the impact of the coal tax since these are being passed on to end-users.

“The effect is between five to seven centavos per kilowatt-hour for every P100 (per metric ton) increase in tax. This will affect consumers,” Aboitiz Power Corp. president and COO Antonio Moraza said.

Alsons Power corporate communications head Oscar Benedict Contreras III said the effect of the coal tax leading to higher power rates for consumers is a cause for concern.

But he said the group would be studying the impact of the higher excise tax and wait until the measure gets implemented before making a definitive statement on the matter.

“The President has to sign it into law, DOF/BIR (Department of Finance/Bureau of Internal Revenue) have to issue IRR (implementing rules and regulations), then we see how it goes when it gets implemented,” Contreras said.

Consumer advocate Laban Konsyumer Inc. (LKI) will ask President Duterte to veto the excise tax on coal, which runs against the administration’s thrust to lower electricity rates.

Currently, over 50 percent of the country’s power requirements are being served by coal power plants.

Environment groups slam the “midnight exemption” on the alleged change in the provision in the coal tax as final version of the Tax Reform for Acceleration and Inclusion (TRAIN) bill plans to exempt all local coal producers.

The Center for Energy, Ecology, and Development (CEED), an environment group,  slammed the “midnight exemption” on the alleged change in the provision in the coal tax as the final version of the TRAIN bill plans to exempt all local coal producers.