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A solon and a ranking official of the Department of Finance on
Tuesday warned that exempting oil and power from the value-added tax
(VAT) will put the country in a worse condition despite the
immediate relief it can give to consumers.
In yesterday’s hearing, Maria Teresa Habitan
of the Finance department told House Committee on Ways and Means
that “the capacity of the government to provide services will be
impaired” with the proposal.
Citing 2007 Finance department statistics,
Habitan said the government will stand to lose at least P41 billion
in income if the tax exemptions are implemented. Out of the total
collection of P274 billion from VAT in 2007, P29 billion and P11.4
billion came from oil and power, respectively.
“As of now, there are a lot of demands on the
budget,” said Habitan.
She cited government projects such as
infrastructure, construction of new schools and health services.
Ernesto Pablo, the party-list representative of
the Association of Power Electric Cooperatives, said that based on
his computations, removing the VAT on power will result in a
deduction of about P1 per kilowatt-hour in the rates of the Manila
Electric Co.
Pablo is the author of House Bill 2777, one of
five House bills seeking VAT exemption for power.
Finance Secretary Margarito Teves actually
rejects proposals to scrap VAT on oil. Instead, the Finance
department is considering to use part of the revenues from VAT to
subsidize public transport or food for the poor.
Nonetheless, the committee ordered the Finance
department to submit a breakdown of its revenues from the VAT in
2007 to see what can be “sacrificed.”
The request was made by Makati City Rep. Teodoro
Locsin Jr., who also raised the issue of possibly granting VAT
exemption to rural electric cooperatives to make their power rates
lower than the firms producing power for Metro Manila.
-- Sammy Martin
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