Marcos pushes tax cuts, lower power bills as inflation strains economy

President Ferdinand Marcos Jr. delivered his fifth State of the Nation Address on July 27, 2026, at the House of Representatives, outlining measures aimed at easing the burden on Filipino citizens amid rising inflation and slowing economic growth. Central to his speech were proposals for broader tax relief, reduced electricity costs, and reforms to the energy sector. The president emphasized immediate action to provide tangible benefits to workers and small businesses, particularly in light of persistent economic challenges. The address focused on increasing the annual personal income tax exemption threshold from P250,000 to P350,000, which would benefit a larger segment of the middle-income population. This move aligns with calls from Senate President Win Gatchalian, who had previously advocated for raising the threshold further to P400,000 and eliminating taxes on certain forms of compensation, including bonuses, overtime, holiday pay, night differentials, hazard pay, and service charges. These changes aim to increase workers' take-home pay and improve overall purchasing power. Additionally, Marcos proposed abolishing the minimum corporate income tax for small businesses. This tax applies when a company's gross income exceeds the standard corporate income tax rate, potentially leading to payments even when taxable profits are minimal. By removing this requirement, the administration hopes to ease the financial strain on smaller enterprises, encouraging investment and job creation. To further support economic stability, the president called for an amnesty program covering unpaid income, estate, donor’s, and VAT liabilities. While the exact amount of revenue that could be forgone or how these tax reductions would balance against fiscal deficits and debt targets remain unclear, the initiative signals a shift toward more lenient enforcement policies. On the energy front, Marcos addressed concerns over high electricity prices by proposing amendments to the Electric Power Industry Reform Act (EPIRA). Specifically, he urged an immediate change to prevent power distributors such as Meralco from imposing system loss charges and associated value-added taxes (VAT) on consumers. System loss refers to electricity lost during transmission and distribution, encompassing both technical issues like faulty equipment and non-technical factors such as theft and meter inaccuracies. Currently, a portion of these losses is passed on to consumers, though regulated by caps. Marcos argued that system loss is not the consumer’s fault and therefore should not be borne by households. He emphasized that removing these charges could significantly lower monthly electricity bills, although the ultimate cost absorption would need to be determined by Congress and regulatory bodies. According to Meralco, system loss constitutes approximately 5% of a typical consumer’s electricity bill. Beyond immediate policy changes, the administration also outlined long-term strategies to enhance energy security. Marcos noted the ongoing monitoring of nearly 200 power projects with a combined capacity of around 10,000 megawatts through 2028, along with more than 1,700 megawatts of energy-storage initiatives. Additionally, the discovery of an estimated 222 billion cubic feet of additional natural gas at the Malampaya field was highlighted as a potential boon for future energy production, with resources expected to last until 2034. In terms of international engagement, Marcos mentioned the Philippines’ participation in 23 free trade agreements, some already in effect and others under negotiation. A notable focus was the anticipated comprehensive economic partnership agreement with the United Arab Emirates. Over the past three years, the government’s Green Lanes initiative has facilitated more than P6 trillion in investments, with estimates suggesting these projects could generate over 400,000 jobs.