The Value Added Tax and Red Tape: What Contributes More to Electricity Tariffs in the Philippines

Ramon Clarete

MPRA Paper from University Library of Munich, Germany

Abstract: Among several factors that may explain why electricity in the Philippines is expensive compared to other ASEAN member states, this paper zeroes in on two: the value added tax (VAT) and red tape in obtaining generation business permits. Legislators have raised the timeliness of lifting just the VAT on electricity to reduce electricity prices. This study however observes that red tape may contribute three times more than the VAT to making electricity costly in the country. The study uses a computable general equilibrium (CGE) model of the Philippine economy to explore the relative contributions of the two to electricity price, and simulate their economic effects. Besides reducing electricity prices, streamlining and shortening the business permitting process for new generation companies in the country will make the economy more efficient and raise the revenue from VAT.

Keywords: Electric Energy; Electricity; Policy Analysis (search for similar items in EconPapers)
JEL-codes: D04 D58 H25 Q48 (search for similar items in EconPapers)
Date: 2016-10
New Economics Papers: this item is included in nep-cmp, nep-ene and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:87727

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