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By Chino S. Leyco and Darwin G. Amojelar, Reporters
THE Lower House Committee on Ways and Means is
pushing for an increase in the excise tax on petroleum products to
offset the proposed removal of the value-added tax (VAT) on those
commodities.
Rep. Exequiel Javier of Antique, committee
chairperson, said pricing based on taxation is hurting consumers at
a time when gas prices keep climbing, as they keep paying more to
maintain their level of consumption.
Any tax on oil should be based mainly on volume
of consumption instead of its market price, the legislator said,
adding it would be reasonable for the government to forego the VAT
windfall.
The government projects to earn P18.6 billion in
revenues from the 12-percent VAT on oil.
“It is no longer conscionable for government
to reap windfall revenue[s] from [VAT] as the price of oil spirals
with no end in sight, while our people groan from the burden of oil
price increases,” Javier said.
Under House Bill No. 4268, the excise tax on
naphtha, regular gasoline and similar products will be raised from
P4.35 to P11.50 per liter, unleaded premium gasoline to P22 per
liter from the current P4.35, aviation turbo jet fuel to P6 per
liter from P3.67, diesel fuel oil and similar fuel oils to P2.50 per
liter from zero, and liquefied petroleum gas to P3 per liter from
zero.
The Department of Finance has yet to issue its
position on the Lower House proposal, but agency insiders said they
are looking at the pros and cons of the bill.
Finance Secretary Margarito Teves earlier said
foregone revenues can reach P73 billion.
Fiscal situation already shaky
An economics professor from the University of
the Philippines however said that the country’s fiscal situation
is already “shaky” as revenue collections are endangered by a
weaker economy coupled with higher tax exemptions.
In a forum last week, Benjamin Diokno, a former
Budget secretary during the Estrada administration, said the present
fiscal situation is unsustainable, despite the declining size of the
budget deficit.
“It’s built on shaky grounds,” he said,
referring to the government’s fiscal position.
Diokno said there is significant risk on revenue
collection, citing the slower economy, which means less taxes would
be collected from the non-oil component of the VAT and other taxes.
“The recent law raising personal tax exemption
and exempting minimum wage earners from income taxation is a big
revenue loser,” Diokno said adding that six months from now, the
corporate tax rate will be reduced from 35 percent to 30 percent.
Diokno told reporters the Arroyo administration
may fail to balance its budget by 2010, adding the government is
likely to have a deficit of 1 percent of gross domestic product
(GDP) next year. GDP is the amount of goods and services produced
locally.
“A deficit is not bad, as long as the money is
allocated properly,” the economist said.
For this year, the government expects a budget
deficit of one percent of GDP or P75 billion as it aims to shield
the economy from the effects of galloping food and oil prices. Last
year, the government posted a deficit of P12.4 billion.
For next year, it expects a deficit of between
P40 billion and P42 billion, or 0.05 percent of GDP. From P1.123
trillion this year, revenues are expected to reach P1.279 trillion
next year.
In the same forum, Finance Undersecretary Gil
Beltran however said the government is not worried about its fiscal
situation.
“We always have options like privatization and
more dividends from government- owned and -controlled corporations.
Our corporations are doing well. We can get more dividends from
them,” he said.
Beltran said the government expects the Bureau
of Internal Revenue to collect P845 billion this year and P968.5
billion next year, while the Bureau of Customs would raise P269
billion this year and P300 billion in 2009.
He said the government used an assumption of
5.7-percent GDP for this year’s tax take and 6.1 percent for next
year.
Despite the reduction of the corporate income
tax by 5 percent next year, Beltran said the government expects
P317.8 billion in taxes next year from P288.3 billion this year. The
corporate income tax contributes about 20 percent of the
government’s tax collection.
From individual taxes, the Finance department
expects P159.9 billion this year and P190 billion next year. It also
anticipates the excise tax take to rise from P58.5 billion this year
to P61.9 billion next year.
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