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President Gloria Arroyo will meet with members of the
Catholic Bishops’ Conference of the Philippines (CBCP) to discuss
the clergy’s proposal to review the Oil Deregulation Law and to
lift the value-added tax on oil.
Executive Secretary Eduardo
Ermita said the meeting will have taken place Wednesday evening or
will be held today. Ricardo Cardinal Vidal of Cebu will lead the
bishops’ delegation.
President Arroyo will bring along
her economic team to the meeting to explain to the bishops
government measures that address economic conditions at present,
Ermita added.
“We will explain our subsidy
windfall, and the reason why we don’t want to lift the VAT
[value-added tax] on oil. We want them [bishops] to understand that
subsidies from VAT help the poor and it is not reasonable to remove
it at this time,” he said.
Ermita added that the
administration hopes that the bishops will understand the
government’s position on the tax on oil.
The Department of Finance said it
is still reasonable to maintain the VAT on oil instead of removing
it despite increases in oil prices.
“Based on our studies, the poor
have not been affected much by the VAT on oil because they primarily
buy basic necessities such as rice and food products, which are
VAT-free,” Finance Undersecretary Gil Beltran said.
If the government were to remove
VAT imposed on oil, he added, it would actually favor the rich, who
use more fuel.
Beltran said lowering the VAT on
oil will lead to problems in tax administration.
Businessmen, he added, will just
transfer tax payments to tax brackets where tax rates are much
lower, depriving the government of its due revenues.
Beltran said reducing the tax on
oil would also mean adjusting budgets of projects that had received
allocations for the year.
--Angelo S. Samonte
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