In a meeting yesterday, the committee approved an amendment to House Joint Resolution (HJR) 21 that scraps the clause exempting from VAT a subsidy (covering fuel and maintenance costs) for firms under the Interruptible Load Program (ILP) that will rely on their generators during peak hours -- thus reducing demand on the grid -- and instead include the tax payment in the reimbursable amount for ILP-accredited establishments.

This would be in keeping with the principles of fiscal transparency and responsibility, according to Marikina City Rep. Romero S. Quimbo (2nd district), who heads the Ways and Means committee.

“We are not giving a VAT exemption. Why? Because it is contrary to our fiscal policy and to have a more transparent system of incentives,” Mr. Quimbo told reporters at the sidelines of the meeting. “We do not like giving exemptions because it distorts the market and our entire incentives mechanism.”

The original resolution approved on Tuesday by the House Committee on Energy also has a clause authorizing government to force firms that have otherwise not applied with the ILP to run their generators without any state compensation.

Besides the ILP, the resolution’s two other measures include fast-tracking of committed power projects as well as a reinvigorated energy conservation drive among both government and private offices.

Energy Secretary Carlos Jericho L. Petilla said the subsidy under the measure is estimated to total some P450 million, adding that ILP participants will be paid on a “per-use basis”.

While reiterating support for the joint resolution, one business group yesterday expressed disappointment with the rejection of the proposed VAT exemption. “This will only work if the VAT refund procedures are clear and are fairly implemented. The history of VAT reimbursement is not encouraging,” Henry J. Schumacher, executive vice-president of the European Chamber of Commerce of the Philippines, said via text.

The Philippine Chamber of Commerce and Industry (PCCI) described the subsidy as a “consuelo de bobo” for ILP-accredited firms. “This amount is only a small thing, but that is there and we only have to follow,” PCCI President Alfredo M. Yao said in a telephone interview.

House Deputy Speaker Henedina R. Abad said the amendment will now be incorporated into the resolution before plenary discussions start on Monday next week.

“We will submit it on the floor with that amendment,” Ms. Abad said in a phone interview.

“Of course it is very difficult to discuss, but we are more confident that we can install a process of monitoring to make sure that the entire procedure (of reimbursement) becomes transparent.”

Energy committee chairman Rep. Reynaldo V. Umali of Oriental Mindoro (2nd district) had earlier said that he hopes to have HJR 21 approved by the chamber next week, in order to give ample time for the Senate to discuss the measure adequately before approving it.

Source: Business World Online