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Wednesday, July 09, 2008
Gov't rejects scrapping of expanded VAT on oil
MANILA -- Finance Secretary Margarito Teves on Tuesday turned down proposals to scrap the expanded value-added tax (VAT) on oil products.
Teves said the scrapping of expanded VAT would only benefit the rich or those who could afford to pay and deny the poor of useful programs that could help them cope with the rising prices of commodities including rice and oil.
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He said it would also mean a revenue loss of about P73.1 billion, which "the government could otherwise use to fund programs to help the poor cope with rising oil and food prices."
"Department of Finance (DOF) studies also show that lifting the VAT on oil will largely benefit the rich because they are the biggest consumers of oil while most of the consumption of poor families is VAT-exempt such as agricultural food products," he said.
The Catholic Bishops' Conference of the Philippines (CBCP) has called on government to revisit laws on expanded VAT and oil deregulation following the continued increase in the prices of fuel in the world market.
The finance chief said the power to suspend tax on oil however rests solely on Congress, which passes the laws and could amend the existing expanded VAT law.
He added that the executive branch is also open to discuss the administration's stand on the issue with the CBCP as well as "work with them in looking for ways to alleviate the impact of rising oil and food prices on our people, especially the poor."
"There is really a need for us to explain the VAT. This is important to our country, especially to the poor," Teves said.
President Gloria Macapagal-Arroyo, in her opening statement before the Cabinet, also defended expanded VAT, which she said enables the government to provide subsidies to the sectors heavily affected by the rising costs of products.
"The rising government money from taxes helps us implement pro-poor programs, including the distribution of low-cost rice," she said.
With the junking of their appeal, CBCP National Secretariat for Social Action (Nassa) Broderick Pabillo warned of possible "unrest" if the government will fail to address the rising prices of food, fuel and essential services.
Pabillo said the public is getting frustrated over the lack of efforts from the government to effectively alleviate poverty in the wake of escalating prices of oil and basic commodities.
He advised the government that instead of giving out subsidies and other dole-outs, it would be best if they come out with "structural changes" such as changing economic policies.
Asked if they are giving the government a deadline to heed their call on the review of expanded VAT and oil deregulation law, Pabillo said they will not do so.
But he added that they hoped the government will be sensitive enough to acknowledge the urgency of their appeal. (JMR/MSN/Sunnex)
For more Philippine news, visit Sun.Star Bacolod. (July 9, 2008 issue)
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