POLICY BRIEF: The proper approach to coal and natural gas taxation in the Philippines

by Viking Logarta, Dr. Marian Delos Angeles, and Jeffrey Koon

This policy brief was published on August 30, 2017 in support of the efforts of the Department of Finance (DOF) in reforming the tax system toward a fairer and more sustainable one, especially in regard to fossil fuels. The DOF intends to propose a coal tax to the legislature before the end of the year (Package 5). 

The DOF surely must be aware that any tax structure has long-term implications on investment decisions and on consumer welfare. It has the power to send the correct market signals to make sure the power infrastructure now and in the future, maximizes social welfare. Under the current regulatory framework of the power sector, stranded costs seem inevitable and what is debatable is the allocation of the burden. The DOF has to make a bet based on the best available evidence. ICSC is ready to support that endeavour.