Ibon says tax removal to cut fuel prices by P7

87% in Manila want VAT on oil scrapped

07/27/2008

It would take President Arroyo more than her entire State of the Nation Address (Sona) on Monday to justify the government’s insistence on keeping the 12 percent value added tax (VAT) on fuel after a survey released yesterday showed almost nine out of 10 Metro Manila residents said the tax must be scrapped.

Think tank Ibon Foundation, in a metro-wide survey held last July 12 to13, showed 87.33 percent of respondents said yes to proposals to scrap the VAT on petroleum products.

Malacañang earlier had said Mrs. Arroyo will highlight the supposed benefits to the people of government’s windfall collections from the VAT as a result of sky-high fuel prices in her Sona on Monday.

Various groups, however, have demanded that the tax on oil and fuel products should be suspended or scrapped to ease the burden on Filipinos amid rising prices with several legislative proposals on the reduction of the VAT currently pending in Congress.

The Catholic Bishops Conference of the Philippines (CBCP) has also called for at least a review of the oil VAT.

Ibon cited estimates show that at current price levels, removing the controversial tax can reduce pump prices by more than P7 per liter.

Ibon said some 371 respondents were covered by the survey with 324 saying yes to the question: “Do you agree with the proposals to remove the VAT on petroleum products. The survey also showed 31 answered no while 16 said they don’t know the issue enough to make a reply.

The Palace has said that while the Sona will extensively touch on the VAT, the scrapping of the VAT on oil is not on the agenda of Mrs. Arroyo’s address.

The scrapping of the 12 percent VAT is out of the question, Presidential

Management Staff (PMS) director-general Cerge Remonde said.

Incoming Socio-economic Planning Secretary Ralph Recto, who as senator was the author of the expanded VAT (EVAT) law, said among his first priorities would be to study proposed alternatives to the VAT.

Recto said he is considering changes or at least reviews in some “policy directions.”

“ Everything is possible ... but I will have to take a look at the pros and cons of all these proposals,” he said on government-run radio, when asked about the possibility of accommodating proposals to shift from VAT to a specific tax on oil.

He said, however, this may not be as easy as it sounds, noting that such shifts especially on VAT for oil may have an impact on small businesses that use fuel.

Still, Recto said that while he will listen to proposals from the legislative, he wants both executive and legislative branches to work on the issue.

“The executive should also listen to good proposals from the legislative branch,” he said.

Recto’s defeat in the 2007 senatorial race had been attributed to his advocacy of the VAT system, which is largely blamed for greatly reducing the purchasing power of lower- and middle-income workers in the country.

Government economists, on the other hand, said the system has helped reduce the government’s budget deficit.

The Department of Finance is expecting VAT collections for 2008 to rise to P119.59 billion this year, with about P18.6 billion more from the 12 percent VAT on oil alone.

Recto added he will bring up with President Arroyo some proposed changes in economic policies once he takes his oath and formally assumes his post on Monday.

He said he has sent text messages to President Arroyo about his initial ideas.

“We have not spoken yet. (But) up to last week I’ve been texting her with regard to some ideas,” he said.

When asked if he will propose new policy directions, he said, “Oh definitely,” but Recto did not elaborate.

Speaker Prospero Nograles, meanwhile, said one of the measures he wants given priority during the second regular session of Congress is the proposal to increase the discount granted to the millions of senior citizens under Republic Act 9257, from 20 percent to 32 percent.

“Increasing the discount by 12 percent would allow our senior citizens to enjoy the full 20 percent discount envisioned by Congress before the imposition of the 12 percent VAT on their purchases,” Nograles said.

He said he will underline his commitment to facilitate the approval of the measure before December when he delivers his speech during the opening of the second regular session of the 14th Congress, a few hours before Mrs. Arroyo delivers her SONA.

Without disturbing the current VAT system, Nograles said the proposed increase in the discount for senior citizens would cancel out the 12 percent e-VAT currently imposed – effectively increasing to 20 percent the actual discount on basic goods and services being patronized by senior citizens.

The Speaker also cited a proposed measure earlier filed by Manila Rep. Ma. Theresa Bonoan-David, House Bill 4421 or “An Act Exempting Senior Citizens from the 12 percent e-VAT, which seeks to exclude senior citizens’ purchases from the coverage of the tax.

Nograles said the bottom line is to “help our senior citizens cope up with the relentless price increases experienced worldwide resulting from the spiraling prices in energy and fuel in the international market.”

He said his proposal and those espoused by his colleagues will definitely be taken up by the proper committees and the subsequent final report on the issue will be debated in plenary.

“The issue of discount for senior citizens will be given priority. We all owe it to them,” Nograles assured.

The House leader also vowed to pursue all the “practical and needed reforms, with the full cooperation of the multi-party membership of Congress, to mitigate the current economic difficulties that even wealthy nations are not spared of.”

“We will not fail our people. We will do what is needed to be done,” Nograles vowed.

Remonde said the President will discuss the “much-maligned EVAT” in the context of its being the source of funds for the government’s social welfare programs for the poor to help them cope with the global phenomenon concerning the unprecedented spike in oil and food prices.

He said “subsidies for power and rice from the EVAT are only short-term solutions to the present problem on oil and food prices.”

The government, Remonde said, has put in place long-term solutions to the global challenge of food and oil.

He stressed that the emergency measures that the government has adopted, particularly the subsidies, have undeniably helped ease the impact of high prices on the poor.

Last June 3, the President launched the “Pantawid Kuryente: Katas ng VAT” program to assist some four million families who consume a maximum of 100 kilowatt hours (KwH) a month of electricity.

Under the program, lifeline users of electricity were given a one-time power subsidy of P500.

During the launch of the Pantawid Kuryente: Katas ng VAT, the President explained that the program aims to give back to the poor the benefits reaped from the implementation of the VAT, specifically the 12 percent VAT on petroleum products.

The President has also launched the Katas ng Vat Pantawid Edukasyon, Katas ng VAT to augment the income of the families of drivers of public utility vehicles (PUVs).

Under this program, the wives of PUV drivers were offered loans to engage in small business enterprises.

The Katas ng VAT is also used in the upgrading of primary hospitals to secondary healthcare hospitals, as well as monetary assistance to the elderly.

Jason Faustino

Back to top

For comments about this website:Webmaster@tribune.net.ph
The Daily Tribune © 2006