THE Philippine Chamber of Commerce & Industry (PCCI) said plans to increase the excise tax on thermal coal used by power plants threatens to derail growth, possibly upending government plans to make the economy more inclusive.
“To continue unlocking our country’s economic potential and improve living standards, power supply must be delivered in an accessible, affordable, reliable, sustained and competitive manner,” PCCI President George T. Barcelon said in statement on Monday, adding that economic growth needs to rise beyond “7% per annum in order to make real significant comparative gains over our neighbors in the region and achieve real inclusiveness.”
Mr. Barcelon said that “Within ASEAN, we have one of the highest unemployment rates of 5.5% of the population; the second highest poverty level with 22% of the population below poverty line… and we rank as the 3rd lowest in secondary education enrolment at 60.5% of the population.”
He said “any policy affecting the quality and costs of power supply should be approached with active awareness and purpose of enhancing the key elements of our economy and that the same shall promote sensitive inclusiveness,” noting that “power quality and costs are among those critical elements that are always viewed with clinical valuation by foreign and local investors.”
The PCCI president also warned that “many (investors) left some years ago due to high and unpredictable power costs and policies.”
Tax reform legislation under Senate Bill 1592, which is currently being reconciled with the House version in bicameral conference, increases the coal excise tax from P10 per metric ton (/MT) currently to P100/MT in the first year of implementation, P200/MT in the second year and P300/MT starting the third year.
Mr. Barcelon said the potential rise in power prices comes at a critical time for foreign investment in the Philippines.
“We now enjoy this rare opportunity when our country is catching the eye of the international business community, so let us not rock the boat, as it were,” Mr. Barcelon added.
For his part, Sen. Sherwin T. Gatchalian, who chairs his chamber’s committee on energy, said the coal tax impact can be mitigated by implementing the Retail Competition and Open Access (RCOA) of the 16-year old Electric Power Industry Reform Act of 2001 (EPIRA), which is expected to foster competition among electricity suppliers.
“With the coal tax in place, all the more that we need to implement RCOA to democratize our power sector. The RCOA will help lower costs to protect consumers from the inflationary effects of the coal tax,” Mr. Gatchalian said in a statement.
Mr. Gatchalian has estimated an “increase of P10 in the monthly electricity bills of average households in 2018, P20 by 2019, and P28 by 2020, noting that these estimates are bound to grow as new coal plants come online in the near future.”
“I was the lone dissenter on the coal tax because we all know that this will be passed on to consumers,” Mr. Gatchalian said. — Arjay L. Balinbin