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By Chino S. Leyco, Reporter
THE Department of Finance has
some reservations over a proposal to suspend the value added tax
(VAT) on oil, and instead raise the excise tax on the commodity.
Teresa Habitan, director for
fiscal planning, said the 12-percent VAT on oil is superior to the
excise tax.
“The problem with specific tax
is that it gets eroded when price increases,” Habitan told
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 VAT on those
commodities.
Rep. Exequiel Javier of Antique,
who chairs the committee, 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.
“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.
Habitan, however, said the
government needs more revenues especially when inflation is seen to
persist until next year.
“Demand for government
subsidies is increasing due to high prices,” she told reporters.
The government projects to earn
P18.6 billion in revenues from the 12-percent VAT on oil.
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 finance department is set to
present its position to the Lower House proposal Tuesday. Finance
Secretary Margarito Teves earlier said foregone revenues from the
suspension of the VAT could reach P73 billion.
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