SEN. Francis Escudero is seeking to exempt electricity sales from the 12-percent value-added tax (VAT), arguing that the proposal would provide immediate relief to households and businesses while preserving the government’s fiscal stability. Escudero said Senate Bill (SB) 476 adopts a targeted approach to tax relief by focusing solely on electricity — one of the biggest cost drivers for Filipino families and industries — rather than implementing across-the-board VAT reductions that could significantly dent government revenues. He made the clarification in response to recent remarks by Executive Secretary Ralph Recto, who warned against proposals to roll back the Expanded VAT (EVAT) rate from 12 percent to 10 percent, citing the country’s roughly P1.6-trillion debt burden. “While broad tax cuts may strain government revenues, lifting the tax on electricity is a fiscally responsible choice,” Escudero said. “It balances social equity with economic necessity, ensuring that families and industries feel relief without compromising our ability to service debt and fund essential government programs.” He noted that the country’s electricity prices remain among the highest in Asia, contributing to higher production costs and fueling inflation. Reducing power costs would have a cascading effect on the prices of basic goods and services, benefiting consumers and improving the competitiveness of local industries, he said. Filed last year, SB 476 is pending before the Senate Committees on Ways and Means, and Energy. The bill will exempt from VAT the sale of electricity by generation, transmission and distribution companies, as well as electric cooperatives. It also covers services rendered by franchise grantees of electric utilities. Escudero stressed that removing VAT on electricity would function as a direct anti-inflationary measure, particularly at a time when consumers are grappling with rising prices of basic commodities. “Every peso saved on power bills translates to more affordable goods and stronger competitiveness,” he said. “This is a targeted strike against inflation, not a blanket reduction that risks fiscal imbalance.” Escudero reiterated that his proposal should not be confused with efforts to revert the EVAT rate to 10 percent. “Secretary Recto is right to be cautious about across-the-board cuts,” he said. “My measure is different. It is surgical, not sweeping. It addresses one of the most pressing pain points of our economy while respecting fiscal realities.”