P-Noy thumbs down proposal to cut oil VAT by half
April 5, 2011
Philippine Star
MANILA, Philippines - President Aquino rejected yesterday proposals by his party-mates in the Liberal Party (LP) to reduce the value-added tax (VAT) on oil.
LP members in the House of Representatives are pushing for House Bill 1970 filed by Batangas Rep. Hermilando Mandanas seeking the reduction of the 12 percent VAT on oil by half or to six percent.
The bill aims to temper the rise in fuel prices as well as its impact on consumer prices.
President Aquino and his economic managers, particularly Finance Secretary Cesar Purisima, have promised not to impose new taxes so as not to further burden the public. They also promised to plug tax leaks and improve collection.
Mandanas said his proposal would “lower direct VAT payments of consumers, eliminate the corruption-laden input tax credit deductions and increase by P50 billion the government’s VAT collections.”
He said his VAT reduction bill is also consistent with the President’s appeal for lawmakers to desist from imposing new taxes.
Under the Mandanas bill, the VAT would be reduced to six percent but would be applied to all manufacturers, wholesalers, traders, retailers of products and services, and end-users.
Businessmen and other merchants involved in the production, distribution and sale of products and services do not pay VAT because the law entitles them to what Mandanas calls “input tax credit deductions.”
For instance, Mandanas said, owners of malls and supermarkets can claim part of their infrastructure, security and electricity costs as deductions.
Because of these deductibles, the government, in many cases, ends up having financial obligations with mall and supermarket owners and other businessmen.
For his part, Quezon Rep. Danilo Suarez said he would continue to push for the restructuring of excise taxes on cigarettes and liquor, or the so-called “sin” products.
He said tax rates on these products have been fixed since 2004, and the small adjustment the law allows is not even enough to cover inflation.
The government is also studying proposals to include farmers and fisherfolk in the fuel subsidy program.
Aquino said a careful study is needed because unlike jeepney and tricycle operators who are documented, there is no official database for farmers and fisherfolk.
Ricky Carandang, one of the presidential spokesmen, earlier admitted that providing fuel subsidy to transport groups is merely a stop-gap measure to help jeepney and tricycle operators and drivers cope with the rising cost of fuel brought about by hostilities in the Middle East and North Africa.
“We never meant this to be sustainable. But given the high fuel prices and given the possible impact that this will have on ordinary people, we felt that we had to take some action,” Carandang said.
He said the Departments of Energy and of Budget and Management would thresh out details of the program upon consultation with the Land Transportation Franchising and Regulatory Board.
“We don’t know what the exact numbers will be at this point. DBM has to get back to us and tell us how much of the savings that we’re generating can be used for these subsidies. There are estimates of between P400 and P500 million,” he said.
by: Donnabelle Gatdula