Manila Targets Power Bills and Tax Relief Amid Rising Cost Pressures

Relief Package Takes Aim at Electricity Costs

President Ferdinand Marcos Jr. proposed immediate amendments to the Electric Power Industry Reform Act that would prohibit power distributors from charging consumers for system losses, a move targeting one of the most visible components of household electricity bills across the Philippines.

System loss encompasses electricity lost during transmission and distribution, both through technical inefficiencies in infrastructure and nontechnical factors such as theft and meter inaccuracies. Under current regulation, a capped portion of these losses can be recovered from end users. According to Meralco, the charge represents approximately 5% of a typical consumer's monthly bill.

Marcos framed the proposal in stark terms during his fifth State of the Nation Address, arguing that consumers should not bear the cost of losses beyond their control. The plan includes eliminating the value-added tax applied to system loss charges. Implementation would require legislative action, and the question of who absorbs the cost remains unresolved.

The administration is also tracking nearly 200 power generation projects totaling close to 10,000 megawatts of capacity scheduled through 2028, alongside more than 1,700 megawatts of energy storage projects. Separately, Marcos highlighted the discovery of an estimated 222 billion cubic feet of additional natural gas reserves at the Malampaya field, which could extend production until 2034.

Tax Thresholds and Corporate Relief

On the fiscal side, Marcos proposed raising the annual personal income tax exemption from PHP 250,000 to PHP 350,000. Senate President Win Gatchalian has separately indicated support for lifting the threshold to PHP 400,000 and exempting bonuses, overtime, holiday pay, night differentials, hazard pay, and service charges from taxation.

The President also called for abolishing the minimum corporate income tax for small businesses. That levy is assessed on gross income when it exceeds regular corporate income tax, creating situations where firms must pay even when taxable profits are minimal.

A broader tax amnesty covering unpaid income, estate, donor, and VAT liabilities was included in the package. Marcos did not provide estimates of foregone revenue or detail how the reductions would align with the government's deficit and debt targets.

Trade Corridor and Investment Claims

Marcos said the Philippines now has 23 free trade agreements either in force or under negotiation, including a planned comprehensive economic partnership with the United Arab Emirates. He cited more than PHP 6 trillion in investments facilitated through government Green Lanes over the past three years, projected to create over 400,000 jobs.

That figure represents investments endorsed or assisted through expedited regulatory processes. It does not confirm that all projects have secured financing, broken ground, or commenced operations.

The President credited banks and digital wallet operators for lowering or removing transaction fees, and noted loan payment extensions offered during recent economic stress.

What Went Unaddressed

Marcos made no direct reference to inflation, despite headline consumer prices running at 6.4% in June, well above the central bank's 2% to 4% target range. His remarks focused extensively on the burden of fuel, food, electricity, and transport costs, yet omitted any discussion of the government's inflation outlook or monetary policy coordination.

Economic growth likewise received scant attention. Days before the address, the administration's economic managers revised the 2026 growth forecast downward to a range of 3.5% to 4.5%, a sharp deceleration from previous years. Unemployment, wages, poverty metrics, the fiscal deficit, public debt levels, and the peso exchange rate were not substantively covered.

The President also did not mention the Philippines' recent reclassification as an upper-middle-income country by the World Bank, a milestone nearly four decades in the making. The achievement arrived alongside the sobering growth revision, underscoring the tension between long-term progress and near-term headwinds.

Regulatory and Political Path Ahead

Amending EPIRA to shift system loss costs away from consumers will require congressional approval and clarity on cost allocation. Power distributors and generators are likely to push back on any framework that compresses margins or shifts liabilities without compensation mechanisms.

The tax relief proposals face similar hurdles. Raising exemption thresholds and eliminating minimum corporate taxes will reduce revenue at a time when the government is managing elevated debt service costs and infrastructure commitments. How the administration intends to reconcile populist tax cuts with fiscal discipline remains an open question.

For now, the proposals signal a recognition that cost-of-living pressures are testing public patience. Whether the legislative machinery can deliver on the promises, and whether the measures prove sufficient to ease household strain, will define the administration's economic credibility in the months ahead.