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SPEAKER
Prospero Nograles has proposed tapping an estimated
P16.7 billion from the 12-percent expanded value-added
tax (E-VAT) on imported oil to subsidize power and fuel
consumption as an alternative, should the proposal to
remove the E-VAT on the electric bills of residential
consumers not materialize.
Nograles
raised the alternative after a Congressional Planning
and Budget Department (CPBD) study showed the government
stands to gain a windfall or additional P16.7 billion
from E-VAT as a result of the increased price of Dubai
oil.
As of
Wednesday, oil flirted with the $130 price per barrel in
the world market, and as imported oil continues to rise,
government revenue from taxes will increase accordingly.
The CPBD
study was made after Nograles directed the office to
find all available means to provide the public economic
relief from the rising cost of food, fuel and
electricity.
Nograles
said such use of the extra collection is easier to
manage and implement than his previous proposal to
remove E-VAT from residential users with P5,000 or less
in electric bills, since his new scheme will not disturb
government fiscal projections.
“The
higher the [oil] price, the higher the EVAT cost. The
higher the EVAT cost, the higher tax collection for the
government. Ergo, this extra profit of the government
from EVAT is not part of its revenue estimates,” said
Nograles.
On
Tuesday, militant legislators filed a bill seeking to
lift the VAT on electricity.
Sen. Mar
Roxas said on Wednesday Malacañang “must now heed the
groundswell of mass support” for the suspension of the
EVAT on oil. Roxas recalled that both chairmen of the
Senate and House committee on ways and means already
declared their support behind efforts to provide
immediate relief to Filipinos.
He also
said the E-VAT collection from the increased oil price
should be used for the immediate relief of the people by
“giving back the money that [government] borrowed from
the people” through tax impositions.
“They
said when the E-VAT was enacted it will be used for
education, health, and many other services but they
cannot show where it was really used. Now it is the
same. They keep saying it will be used to subsidized
power use, subsidize rice prices, and many others but
until now, they still have no concrete plans,” said
Roxas.
In
changing his position on how to help the people by
suspending the E-VAT, Nograles heeded warnings that
suspending the tax on oil will severely disturb existing
fiscal projections of the government. “Whichever will
bring the best benefits for the people and the economy,
we will go for it. What is paramount is to give relief
to our people without resulting in long-term economic
dislocation.”
He
quoted the CPBD study: “The budget assumption on Dubai
oil for 2008 was at the level of $70/barrel, with
projected VAT collection of P44 billion. But Dubai oil
is now $115.23 per barrel and the VAT intake could now
reach the P60.7 billion level. This means that the
government earned P16.7 billion extra from VAT for Dubai
oil alone.”
Government financial managers use
Dubai oil, among other “predictable tax intakes,” as one
parameter in making revenue assumptions.
The
breakdown of his proposed subsidy using the extra VAT
collection includes P6.5 billion for households using
500 kWh and below at P1/kWh subsidy, P8.3 billion for
diesel fuel at P1.30/liter subsidy, and P1.9 billion for
liquefied petroleum gas (LPG) at P1/liter, for a grand
total of P16.7 billion, Estimates of homes using 500 kWh
or less a month were placed at 96 percent.
The
study said the earlier Senate proposal to scrap the
12-percent VAT on oil products could be
“counterproductive because it will permanently reduce
the tax base of the government.”
It
added, “There will be an estimated revenue loss of P51
billion on oil alone. Moreover, shelving the 12-percent
VAT on fuel may be difficult and may take a long time to
implement because it will require legislative action by
amending the Reformed VAT Law or Republic Act 9337,
which may even face veto from the President.”
Lakas
Rep. Edcel Lagman, chairman of the House appropriations
committee, also expressed reservations on the removal of
VAT from petroleum products and electricity. “I would
suggest that we should find other ways to lower power
rates like studying the charges of Meralco, Napocor and
other matters that are contributory to high cost of
electricity in the country before venturing on that.”
He
favors removal of VAT on the systems losses of Meralco.
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