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EFFORTS
to suspend or completely remove the 12-percent
value-added tax (VAT) on oil and oil products are
misplaced, and would help the rich more than the many
who are hungry, Finance Secretary Margarito Teves said
Monday.
The
government would lose close to P46 billion in
revenues—actual VAT collection from oil last year—going
that route in trying to help the people, and this loss
would partly come from VAT payments of well-to-do
families.
For
income groups earning P20,000 or lower in a year, only
P45.7 million or 0.1 percent of the benefits will accrue
to them; and for those with annual earnings from P19,999
to P39,999, only P686 million or 1.5 percent of the
benefits have relevance to them.
For
those earning 60,000 up to P99,999, only 12.4 percent or
P5.667 billion will accrue to them.
He also
said families earning P61,545 a year, which represents
the poverty threshhold in 2003, also have similarly
“minimal” benefits from the suspension—equal to only 6
percent of total taxes suspended or only P2.7 billion of
the P46 billion that will be lost.
In
addition, jeepney fares will go down by only 24 centavos
if the 12-percent VAT were suspended, hardly the
significant dent sought from the existing minimum fare
of P7.50 at the moment, according to Teves.
Finance
Undersecretary Gil Beltran, who heads fiscal planning,
said the P46 billion will have to be obtained from
somewhere else if the VAT revenues from oil were to be
abrogated or suspended—possibly to be borrowed.
He said
that without the P46 billion, revenue flows will suffer
and likely impact on the country’s credit standing and
very possibly force the rating agencies to downgrade the
country’s credit stature.
He added
it will also translate to an additional deficit of P46
billion this year, given that the VAT on oil was an
important factor in setting this year’s fiscal program.
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