Arroyo Holds on to 12% VAT on Oil, Power

The 12-percent value-added tax (VAT) on oil will remain despite popular demand to have it scrapped, as Mrs. Gloria Macapagal-Arroyo stood pat on her position that her government gets funds for pro-poor projects from the said revenue measure.

BY LYN V. RAMO
Northern Dispatch
Posted by (Bulatlat.com)
Vol. VIII, No. 24, July 20-26, 2008

BAGUIO CITY (246 kms north of Manila) – The 12-percent value-added tax (VAT) on oil will remain despite popular demand to have it scrapped, as President Gloria Macapagal-Arroyo stood pat on her position that her government gets funds for pro-poor projects from the said revenue measure.

During a meeting with two political parties here Friday, Arroyo said, “With or without VAT, prices of commodities will still continue to rise.”

Transport group Pagkakaisa ng mga Samahan ng mga Tsuper at Operators Nationwide (Piston or Unity of Drivers and Operators Nationwide) demanded that the VAT on oil be scrapped to ease the rising cost of fuel.

Arroyo, however, said if she removed the 12-percent VAT on oil, the government will lose its revenues. She insisted the government would not stop charging VAT since collections have already been allotted for the delivery of basic services including health and education.

The Department of Finance said some P43 billion ($1.02 billion at the January-June 2008 average exchange rate of $1:P41.98) has been collected on consumer items in the first six months, accounting for some 40 percent of the annual target.

Simple arithmetic

But according to Carlito Wayas of Piston Metro-Baguio, removing the 12-percent on oil would alleviate the plight of not only drivers but also the public. He said at P55.90 ($1.26 at the July 16 exchange rate of $1:P44.46) per liter of diesel, P6.70 ($0.15) goes to the government as VAT.

A jeepney driver consumes about 25 liters a day and removing the VAT on oil translates to a hefty P167.50 ($($3.77) daily savings on diesel oil alone. If the VAT on oil is removed, a driver living on only P45 ($1.01) a day would have enough savings to support three to four more children, according to Wayas.

“Pati LPG at iba pang produktong petrolyo ay bababa ang presyo pag inalis ang VAT” (Even the price of LPG and other petroleum products will be lowered if the VAT is removed), Wayas said in an interview. An 11-kilo LPG tank costs P700 ($15.74) in the local market. Without VAT, its price could be lowered to P616 ($13.86), said Wayas.

He said even the price of rice might decrease because some rice mills use gasoline-fed generators.

VAT bleeds the poor

Piston maintains that it is not true that only the rich would benefit from the removal of the VAT on oil.

“Mas maraming mahihirap ang gumagamit ng langis” (There are more poor people among oil users), Wayas said.

Arroyo said in her speech that the rich consume 80 percent of oil in the market, while they use 90 percent of all the power. “Removing VAT on energy and oil will only benefit the rich,” she said. It would deprive the poor of their chance to be given services, she added.

An unnamed jeepney driver here said, “Saan laeng a VAT ti gasolina ti masapol a maikkat. Amin koma a magatang ket awan VAT na” (It’s not only the VAT on oil that should be removed. VAT on all goods should be removed.) He said Arroyo made Filipinos poorer.

“Since January, oil prices increased by 20 times already, giving the government more money,” Wayas meanwhile said. Any increase in the price of oil means an increase in state revenues, he added.

“Isunga uray kada Sabado a ngumato ti presyo ket kaykayat latta ni Arroyo” (That is why, even if the oil prices increase every Saturday, Arroyo still likes it), he told Nordis. Northern Dispatch / Posted by Bulatlat

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