Lift taxes to lower power rates, Lopez tells Arroyo

MANILA, Philippines - Shortly after declaring that he was willing to sell the family's shares in the Manila Electric Co. (Meralco), the Lopez patriarch urged President Gloria Macapagal Arroyo to remove structural disincentives that are driving electricity prices up. In an open letter to Mrs Arroyo dated May 12 but saw publication in major newspapers only on Wednesday, Oscar Lopez urged the President to remove the expanded value added tax (EVAT) on electricity and remove government royalties on indigenous power sources in order to lower power costs. Lopez said removing royalties and the 12% EVAT will reduce the cost of electricity by as much as P2.40 per kilowatthour. Lopez chairman of First Philippine Holdings Corp. that controls more than 33 percent of Meralco. "I am writing this open letter to you to express my full support to your desire to bring down power rates. In this regard I have proposed that EVAT be removed and the royalties of Malampaya gas be waived or proceeds used to subsidize low income consumers and other preferred sectors such as export industries," Lopez said in the open letter. "If we clamor to have cheaper power why do we tax it so heavily in the first place?... Your Excellency, if you want to give cheaper electricity rates to consumers you must first remove these EVAT taxes and royalties on natural gas," he added. Lopez said the country's drive to develop indigenous and alternative sources of power from the 1970s until the present paled immensely in comparison to our Asian neighbors. He also noted that indigenous fuels are made artificially more expensive than imported ones because of this tax and royalty burden. "Even if we use more indigenous fuels in our power generation mix today that reality doesn't lead to lower electricity prices and is not likely to spur more development of indigenous energy until these structural disincentives are corrected," Lopez said. "The country's efforts will go a long way if government paid closer attention to removing the taxes and royalties that gravely penalize Filipino consumers in using their own indigenous funds... much of these come from old antiquated Marcos era presidential decrees that no longer fit the ties and although they provide revenues for government they serve to make already expensive power even more so," he added. Malacañang has yet to issue a statement on Lopez' open letter. - GMANews.TV