Using government data, Ramon Ramirez, electrical engineer and spokesperson of People Opposed to Warrantless Electricity Rates, concluded that the poor pays for 90 percent of the VAT on oil and power.

BY RONALYN V. OLEA
Bulatlat
Volume VIII, Number 26, August 3-9, 2008

The poor and the middle class who probably expected that some measure of relief would be announced by Mrs. Gloria Macapagal-Arroyo during her State of the Nation Address (SONA) last July 28 may have been disappointed. A substantial portion of President Arroyo’s SONA was devoted to defending the administration’s adamancy in retaining the value-added tax (VAT) on oil and power.

An Effigy of VAT. (Photo by Ronalyn Olea)

Arroyo said, “Kapag ibinasura ang VAT sa langis at kuryente, ang mas makikinabang ay ang mga may kaya na kumukonsumo ng 84 porsyento ng langis at 90 porsyento ng kuryente habang mas masasaktan ang mahihirap na mawawalan ng P80 billion para sa mga programang pinopondohan ngayon ng VAT. Take away VAT and we strip our people of the means to ride out the world food and energy crisis.” (If the VAT on oil and power is scrapped, the well-to-do who consume 84 percent of oil and 90 percent of power will benefit while the poor who stand to lose P80 billion [$1,808,931,599 at an exchange rate of $1=P44.225] for programs funded by VAT will suffer.)

However, government data belies her claim that the rich pay 84 to 90 percent of the VAT.

Power

Electrical engineer Ramon Ramirez, spokesperson of People Opposed to Warrantless Electricity Rates (Power) and convenor of Agham (Science and Technology for the People) said, “It is not the well-to-do but the majority of the people, which includes the poor, who pay 90 percent of the VAT on power, directly and indirectly.”

Data from the Department of Energy shows that in 2007, electricity sales by sectors were as follows:

Ramirez said that while the industrial and commercial sectors consumed 62.4 percent of the electricity, the companies promptly passed on the VAT on power to the buyers of their products and services — the consumers, which include the poor and the vast majority of the people.

He maintained, “Thus, the consumers themselves, not the owners of the companies, ultimately paid the VAT on power.”

Ramirez said that the 3.4 percent consumed by street lighting, public buildings and the like and the VAT paid for them came from the people’s taxes. “Therefore, the VAT on the total of the three items, 66 percent, was paid indirectly by the people, not the rich,” he said.

Analyzing the data from Meralco’s latest breakdown of residential consumers, Ramirez said that the well-to-do who are presumably consuming more than 500 kilowatt-hour per month consumed only 28 percent of the total power delivered to homes, or 28 percent of the 34.11 percent in residential sales. This amounts to a mere 9.55 percent of the total power consumed.

Ramirez said that this means that relative to the nationwide power consumption in the DOE data, only about 10 percent of the VAT on power were paid for by the well-to-do and the rich.