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THE
government can well afford to finance the cost of
subsidizing the poor hit the hardest by rampaging
oil-related price increases.
But,
Finance Secretary Margarito Teves said Monday, they can
only plow back up to P20 billion worth of excess
collections from the value added tax (VAT) on oil under
a proposed cash-transfer mechanism, if the legislators
do not take away the cash hoard from their hands first.
The
cash-transfer or subsidy scheme is the subject of an
ongoing discussion among oil firms, transport-group
heads and government regulators, chiefly from the
Department of Transportation and Communications, or DOTC,
on how best to pour that much-needed VAT revenue to the
transport sector and alleviate its plight.
But the
general idea, Teves said, was to redistribute the oil
VAT collection to the hands of jeepney drivers whose
daily income has been ravaged by the constant uptick in
pump prices for sometime now.
“Congress wants us to do away with the VAT on oil
products, which we already identified as the source of
the proposed transport-subsidy scheme,” he told
reporters Monday.
The
chairman of the Senate’s trade and commerce panel sees
the matter differently.
The
proposed zero VAT on oil is a “win-win” solution to
mitigate the burgeoning miseries of consumers and the
transport sector groaning over skyrocketing cost of
petroleum products, said Sen. Mar Roxas II.
He
suggested that “if the government wants a win-win
solution, then it must immediately support the removal
of the VAT on oil” as both jeepney drivers and
commuters, for instance, stand to immediately benefit
from the tax relief.
“The
disposable incomes of our people continue to shrink due
to the high cost of food, oil, energy and their other
daily needs,” Roxas said, adding that “if we don’t heed
this cry for immediate relief, our economy is in danger
of slowing down.”
At the
same time, Roxas noted that the Arroyo government was
already on track in agreeing to study its options on
whether to suspend, reduce or eliminate altogether the
12-percent VAT on oil and energy. “That is a big leap
from its original stand for an automatic rejection of
any proposal to touch the VAT law.”
If the
VAT on oil products is revoked, the subsidy money set
aside for the transport sector will vanish as well,
Finance Secretary Teves said.
He said
government calculations show “excess” VAT collections
ranging from P19 billion up to P20 billion provided the
tax stays in place. The excess was based on the
assumption the price of imported crude averaged no more
than $114 per barrel during the year.
Since
government-revenue projection was based on a lower
average price of oil, the current price having already
moved higher to well past $120 a barrel at present, the
higher-than-projected VAT revenues were to provide a
cushion from which to fund the subsidy, Teves explained.
How that
mechanism was supposed to work is the subject of ongoing
discussions among stakeholders led by the DOTC.
Teves
said it could come in the form of passbooks where
jeepney or bus drivers must reflect gasoline or diesel
purchases for which they could obtain cash refunds.
There
are proposals to limit the allowable refundable
purchases to 20 or 30 liters per day but some have
sought up to 40 liters, according to Teves.
“The
details are still being worked out but what is important
here is that the cash refunds reach the poor sector
where the oil price increases are felt the most,” he
said. (With Butch Fernandez) |
