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COLLECTIONS from the 12-percent reformed value-added
tax, or R-VAT, in 2007 went slightly above target at
P88.93 billion, the Department of Finance (DOF) said
Thursday, amid intensifying debates on whether the
government should consider suspending the tax on
petroleum products to ease public pain from rising
prices, even at the risk of derailing fiscal balance.
Domestic manufacturers, meanwhile, asked
the DOF to correct the wrong practice of levying VAT on
the system losses of the Manila Electric Co. (Meralco).
It was absurd, said the Federation of Philippine
Industries (FPI), to tax a loss; the remedy need not go
through legislation, the group said.
And in the Senate, the ways and means
committee said it was close to completing a study of the
options regarding the treatment of VAT on petroleum
products and electricity, with a view to easing the
public
burden without derailing the fiscal balance. The Senate
trade and commerce committee chairman pressed for the
front-loading of deliberations on bills to suspend or
scrap the 12-percent VAT on fuel and electricity.
The DOF said Thursday it originally
intended to raise at least P88.88 billion, but actually
collected P51 million more.
Of the amount, the Bureau of Internal
Revenue (BIR) collected P31.7 billion and was ahead of
its goal by P4.2 billion.The Bureau of Customs (BOC), on
the other hand, collected P57.2 billion and was short of
its target by P4.1 billion.
“The BIR collection was boosted by
incremental revenues from the additional 2-percent VAT
[that added P700 million], higher collection from
electric power industry [adding another P700 million],
corporate income tax [adding P1.5 billion], lower impact
of mitigating measures [of P200 million] and lower
estimated input VAT claims of VATable entities [for P2.9
billion].
“It was negatively affected by lower oil
industry output (P2.5 billion lower),” the DOF said.
“The BOC collection was negatively
affected by the 9.5-percent exchange rate appreciation
resulting in lower collections on raw materials for
petroleum products by P 3.7 billion (P29.0 billion as
against target of P32.7 billion) and slightly-higher
collection from petroleum products by P0.1 million.
“The lower collection arose partly from
lower volume of petroleum product imports which was not
offset by the higher average price of oil (US$68.48 per
BBL) compared with the US$63 per BBL projection,” the
DOF added.
The R-VAT collection last year was
nearly 14 percent higher than in 2006, as collections by
the BIR rose from P21.6 billion to P31.7 billion last
year.
R-VAT collections from the BOC rose from
P55.2 billion to P57.2
billion.
The domestic manufacturers’ appeal to
stop levying VAT on Meralco systems loss followed the
objection of foreign businessmen here for a reported but
unconfirmed report of a government plan to take over
Meralco, maintaining that the distribution of
electricity, just like in water, would surely be more
efficient if left in the hands of the private sector.
Rob Sears, executive director of the
American Chamber of Commerce and a Meralco shareholder,
said the government should look at improvements in
distribution of water after it was left to the care of
the private firms. “It is better run now, more
efficient. It is not right to reverse that.”
The Meralco stockholders’ meeting is set
May 27.
Jesus Arranza, FPI president, said in a
letter to Finance Secretary Teves the VAT on Meralco
systems loss can be erased without the need of an
amendment to the law since it is a clear mistake—
because a sales tax cannot be levied on losses, “more so
on losses as a result of theft.”
Aside from this, Arranza said losses can
even be deducted from the filing of income tax as stated
in Section 34 of the National Internal Revenue Code.
“In view of the foregoing, we strongly
believe that VAT, which replaced the sales tax, was
inadvertently levied on the system loss. If our premise
is correct, may we respectfully request for you to
kindly intercede and do all the necessary corrective
actions so as to bring about additional savings for the
Filipino household,” he said.
Arranza also made it clear that Meralco
should not be faulted on this since the company just
probably made the levying of the VAT simpler by lumping
all the costs and then based the tax on the total.
However, Arranza said, it is not right for Meralco to
charge the public for its failure to follow its contract
on the purchase of electricity from the National Power
Corp.
Warning that the economy is slowing down
daily as every consumers’ disposable income continues to
shrink due to high oil, food, and energy costs, Sen. Mar
Roxas II, meanwhile, recommended that Congress give
overburdened Filipinos a break by frontloading
deliberations on bills to suspend or scrap the
12-percent value-added tax fuel and electricity.
“The [people] are crying out for
immediate relief which can only take place if we amend
the VAT law,” said the chairman of the trade and
commerce panel.
In a statement, he suggested that the
House of Representatives, for a start, could take its
cue from the Arroyo administration’s decision to study
the implications of a reduction or elimination of the
12-percent VAT on oil and energy, and let the
appropriate House committees begin public hearings on
amendments to the VAT law.
“The administration is now looking at
the implications of either reducing or scrapping the VAT
on oil and on energy. That’s a big leap from its
original stance for an automatic rejection of any
proposal to touch the VAT law,” Roxas recalled. With
B. Fernandez |
