MANILA, Philippines — A proposal now pending in the Senate seeks to remove the 12 percent value-added tax (VAT) on electricity, a move that could significantly reshape how Filipinos experience one of their most basic necessities. Senator Francis “Chiz” Escudero, who is backing the measure, underscored that the Philippines continues to have one of the highest electricity rates in Asia—a long-standing issue that has weighed heavily on households, small businesses, and major industries alike.

Electricity is not a luxury; it is a fundamental driver of daily life and economic productivity. From powering homes and schools to sustaining factories, hospitals, and digital services, the cost of electricity has a cascading effect on the prices of goods and services. When power rates rise, inflation often follows. Removing the VAT on electricity, proponents argue, could offer immediate relief to consumers and help industries stay competitive, especially at a time when many Filipinos are still grappling with rising food prices and transportation costs.

However, the proposal also opens a broader fiscal debate. VAT is a major source of government revenue, funding social services, infrastructure, and public programs. Eliminating the tax on electricity raises questions about how the government will compensate for the potential loss in revenue. Will savings for consumers outweigh the budgetary gap, or will other taxes eventually rise to fill the shortfall?

This discussion goes beyond economics and into policy priorities. Is it time to treat electricity as a social necessity rather than a taxable commodity? Or does long-term energy reform—such as investing in renewable sources and improving grid efficiency—offer a more sustainable solution than tax relief alone? As lawmakers deliberate, the public is left to reflect: will removing the 12% VAT on electricity truly bring lasting relief, or is it only a temporary fix to a deeper structural problem in the country’s energy sector? (Larawan: BrainBoxAI)