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By Efren L. Danao, Senior Reporter
The Senate Committee on Ways and Means ignored
objections of the Department of Finance and will go ahead with
hearing a bill seeking suspension and eventual elimination of the
12-percent value-added tax (VAT) on petroleum products.
“The Department of Finance cannot vote,”
Sen. Francis Escudero, the committee chairman, said Thursday.
“They may raise their objections during the public hearing, but in
the end, it will be the Senate and the House [of Representatives]
that will decide on this issue.”
Finance Secretary Margarito Teves and Trade
Secretary Peter Favila said the government would lose about P60
billion in annual revenues if the VAT is suspended. Moody’s
Investors Service had also warned that the Philippines’ credit
rating would be downgraded if VAT on oil is removed.
Escudero disregarded these objections and said
the committee hearing would be held before Congress resumes its
session on January 28, although no definite date has been set yet.
Sen. Mar Roxas 2nd, prime proponent of the VAT
suspension on petroleum products, welcomed Escudero’s
announcement.
“Your legislators are ready to buckle down and
work to provide relief to our people,” Roxas said.
He pointed out that the executive department is
duty bound to implement the suspension and elimination of the VAT on
oil if it becomes a law.
Roxas described the opposition to his proposal
as “misplaced” as he contended it would not only provide relief
to consumers but also “reflate” the economy and prevent an
inflationary spiral.
Escudero said he could not understand Malacañang’s
warning that lifting or suspending the VAT would cause the value of
the peso to deteriorate.
“They had been saying they were concerned
about the high value of the peso and that they were looking for a
mitigating measure. Now, they are warning that the VAT would weaken
the peso. What is their real position?” he asked.
But while Escudero is for hearing the bill of
Roxas, he said some constitutional questions might arise from it.
“The problem with suspending the VAT on oil is
that you give this authority to the President,” he explained.
“There is the constitutional question of whether Congress could
delegate this power.”
Escudero said the proposed six-month suspension
would create problems should the high prices of petroleum products
last for a longer period.
He added that he would prefer that Congress and
the administration admit that imposing VAT on petroleum products was
a mistake because it affects other goods and services, and that this
“mistake” should be corrected.
“The government would not lose much. All it
has to do is improve its collection of taxes and minimize
corruption,” Escudero said.
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