Power rates seen to go up

THE signing into law of a comprehensive tax reform bill by President Rodrigo Duterte will minimally affect the price of electricity in Baguio City and Benguet Province.

This relief will most likely come from the adjustments to the personal income tax rates in the country, with the newly-signed law shifting the burden of taxation from low-income segments to the richest individuals.

Benguet Electric Cooperative General Manager Gerardo Versoza said Beneco’s power supplier who rely on coal will be among those affected with the increase of tax on coal.

“The buying price of Beneco from the power plant will increase due to tax and whatever increase in cost by way of tax will be passed on to its consumers,” Versoza said.

The tax reform law exempts those earning an annual taxable income of P250,000 or below. It also raised exemption for 13th month pay and other bonuses to P90,000.

To offset lost money to exemptions in personal income tax, the government is relying on the expansion of the value-added tax base and additional taxes on petroleum products, vehicles and sugar-sweetened beverages, among others.

Versoza views this tax measure for the wage earner to be beneficial due to the lowering of withholding taxes.

"I think it’s something like one to two centavos increase for the first year which means if the consumer consumes 100 kilowatt per hour which is about 10 centavos plus one to two centavos," Versoza pointed out.

The residential consumers of Beneco contribute about half of the sales of the power distributor which have varying volume of consumption every month with those consuming 45 kilowatt hours and below a month constitutes about 70 percent.

"Consumers of Beneco who consume 45 kilowatt hours and below enjoys a discount, the so called lifeline rate. For instance, if your consumption is 20 kilowatt hours a month, and assuming the price command of Beneco is at P8, then you will have to pay around P160 resulting to a 50 percent discount or around P80," Versoza explained.

The tax reform measure reiterates based on initial computations, it could generate almost P150 billion that would be used to fund the government's ambitious infrastructure program and social services.

"The graduated discount enjoyed by all this residential customers of the cooperative which comprises 70 percent of the pays less with those consuming 46 kilowatt hours will equally pay the discount particularly big business establishments obligated to pay the subsidy," he added.


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