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By Euan Paulo C. Añonuevo, Reporter
Lawmakers are proposing a return to specific tax
for oil products in lieu of value-added tax (VAT) to give the public
transport sector reprieve from high fuel prices.
In a press conference yesterday, Rep. Exequiel
Javier, chairman of the House Committee on Ways and Means, said he
has filed a bill seeking a return to the specific system of taxation
for pump products.
Under the present VAT system, government
revenues from oil increase when the VAT’s share in pump prices
rises along with the price of fuel following a spike in the price of
oil in the world market.
Javier said it is in contrast with the specific
tax system wherein “the tax remains the same . . . even if the
price of oil goes up in the world market or the exchange rate goes
up.”
This system, he said, would help solve high pump
prices as it would immediately bring down rates, for diesel
specifically, by about P3 per liter. At current diesel prices of
about P59 per liter, VAT represents about P6 per liter.
Javier said the proposed measure would be more
acceptable to the government than the growing clamor from a number
of groups for the scrapping of VAT as specific tax would assure
collections for the government’s coffers.
He said, “The Finance department and Malacañang
are receptive, from what I’ve read in the papers, to the idea as
they are totally against the suspension or the scrapping of VAT as
it will remove government revenues. But they’re not against a
replacement of VAT with another tax system.”
The lawmaker added that others at the Lower
House have filed similar bills seeking to implement specific tax for
fuel products.
It would be recalled that President Gloria
Arroyo has stood pat on maintaining VAT collections on oil as
scrapping these would deprive the government of revenues for
“pro-poor” projects, especially at a time when prices of
commodities have been soaring worldwide.
A shift to specific tax will not deprive
government of revenues culled from oil products, which for this year
alone it targets to collect about P73 billion. However, the proposal
will cap government’s collections from oil to this level and eat
away at any increase in revenues whenever the price of the commodity
goes higher than its benchmarked price for the commodity.
Government is projected to amass about P18.6
billion in windfall revenues this year because of high oil prices in
the world market.
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