THE Department of Trade and Industry (DTI) is expecting the manufacturing sector to face higher power costs as a result of the higher coal excise tax.
Trade Secretary Ramon M. Lopez said that the proposed tax — which he considers to represent too “rapid” an increase — will affect the growth of the manufacturing sector but remains hopeful that it will not heavily affect the DTI’s targeted 10% increase in growth next year
Last week, Mr. Lopez said he expects the manufacturing sector to maintain its momentum given the DTI’s programs to strengthen domestic manufacturing.
Aside from the Manufacturing Resurgence Program and the tax and fiscal incentives under the 2017 Incentives Priorities Plan, Mr. Lopez also said that the DTI is also looking into high-value goods that can be locally manufactured to reduce the country’s dependence on imports.
However, power costs are a key consideration for businesses, especially manufacturers, in deciding to locate in a particular country.
The Senate version of the tax reform bill raises the coal excise tax from P10 tax to P100 per metric ton next year, adding another P100 by 2019. By 2020, the excise tax for coal could rise to P300 per metric ton if the legislation passes.
The excise tax on coal is included in the first package of the comprehensive tax reform program, currently being discussed in bicameral committee.
“You can see the cost implications. Offhand, it still needs to be studied [because] that’s too big of an increase. It’s a little surprising. It’s a challenge, obviously, [because] it’s a much higher cost for the power. You’ve seen the impact on our monthly bills,” Mr. Lopez said. — Anna Gabriela A. Mogato