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THE National Economic and Development Authority (NEDA) has thumbed
down a proposal to lift the value-added tax (VAT) on oil products.
Augusto B. Santos, NEDA director general, said
the rapid increase in oil prices is an external problem, leaving the
government with little leeway to stave off its adverse effects.
“You know that in NEDA’s perspective, we
want to promote economic efficiency. The policy position of NEDA is
let the market react to it, because if the market will react
accordingly that will mean economic efficiency,” Santos told
reporters.
VAT on oil is very beneficial, Santos said,
adding the government can spend the money raised on many
infrastructure projects and social services.
Finance Secretary Margarito B. Teves, earlier
said the government estimates revenues foregone reaching P54 billion
should a proposal to exempt oil products from the 12 percent VAT be
adopted. This amount is P14 billion higher than last year’s
account.
Legislators have called for the exemption to
help consumers cope with rising fuel costs.
The finance department however is pushing ahead
with a likely 1-percent cut in the tariff on imported oil next
month.
Teves said the reduction in the tariff on oil
could translate to a P0.50 centavo per liter reduction in diesel
prices.
“We estimate that, in general, every 1-percent
point reduction in the tariff on oil would allow a reduction in the
pump price of oil across the board by P0.23 centavos per liter,”
he said.
The Finance department earlier tweaked the
trigger price for the tariff cuts. Tariffs would be set at 2 percent
if crude hits $83.37, and at 1 percent at prices of $92.41 a barrel.
The tariff would be removed altogether should
prices reach $103.25.
For diesel, a two-percent duty is set at prices
of $105 a barrel, 1 percent at $110, and zero at $115.70 a barrel.
-- Chino S. Leyco
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