SENATOR Mark A. Villar is pushing for urgent legislative action to eliminate the 12% Value-Added Tax (VAT) imposed on system loss charges in monthly electricity bills, aiming to provide immediate financial relief to millions of Filipino households.
Villar filed Senate Bill No. 2392, which seeks to amend Section 109 of the National Internal Revenue Code by explicitly exempting the system loss component charged by distribution utilities and electric cooperatives from VAT.
The measure targets the recoverable technical and non-technical system losses authorized by the Energy Regulatory Commission (ERC) under the Electric Power Industry Reform Act of 2001.
System loss refers to electricity wasted or lost before ever reaching the end-consumer. This includes technical losses occurring naturally along distribution grids, as well as non-technical losses stemming from electricity pilferage, meter inaccuracies, and human error.
Under current regulations, allowable system losses are passed on to consumers, comprising roughly five to six percent of a standard monthly electricity bill.
“Simple lang ang prinsipyo natin: kung hindi naman nakonsumo ng consumer ang kuryente, hindi siya dapat singilin ng buwis para rito,” Villar stated, emphasizing that citizens should not be taxed for power they never used.
The lwmaker stressed that families are already burdened by high baseline rates without carrying the additional tax burden for lost power.
The legislative push aligns with recent recommendations from the ERC, which similarly urged the removal of VAT on system loss charges, arguing that consumption taxes should strictly reflect actual power utilized.
The reform comes at a critical time. As of mid-2026, the Philippines continues to record some of the highest electricity tariffs within ASEAN and across Asia.
Villar highlighted that even modest monthly savings compound into significant relief for low- and middle-income families struggling against rising living costs.
“Sa bawat bawas sa singil sa kuryente, may dagdag na puwedeng ilaan ang pamilya para sa pagkain, pamasahe, gamot, at edukasyon,” Villar noted, describing the bill as a practical measure that directly redirects savings back into basic household needs.