Post by Sapphire Capital on Jul 15, 2008 4:13:05 GMT 4
Tuesday, July 15, 2008
Senators are likely to support the proposal of the Department of Finance (DOF) that seeks to replace the value-added tax (VAT) on oil with a specific tax.
Sen. Francis Escudero, chairman of the Senate ways and means committee, welcomed the position of the finance department.
“That’s a positive development. At least, they are taking a second look and not rejecting proposals outright. I hope they will act on it with dispatch,” said Escudero, who has been calling for the removal of VAT on oil.
Sen. Aquilino Pimentel Jr. said he has been pushing for the imposition of specific tax but he argues that under the circumstances, the price of oil with tax remains higher compared to no tax at all.
However, Sen. Richard Gordon stressed the need to retain VAT, particularly now that the government needs funds to help the victims of typhoon “Frank” that ravaged several provinces in the Visayas and Mindanao.
“I don’t think I agree with that. I think if you take out VAT, it will benefit the rich who are consuming a lot more than the poor. The poor can only afford the basic daily needs but the rich have more, they have cars and extra money to buy things,” Gordon said.
“As far as I am concerned, I think it is a question of judgment. I am laying my political opinions on this. I am not afraid to decide on that if I am the one who needs to decide. Here are the funds for infrastructure that will cater to self-sustaining food security and create new jobs,” Gordon said.
Gordon said he does not want VAT used as a subsidy for the people who will just always rely on dole-outs.
He agreed with Sen. Edgardo Angara’s argument that the government will face bigger economic problems once VAT is removed.
“A budget deficit in an inflationary situation will be explosive. We have to tell the people that sometimes, we have to bite the bullet. Stop closing the minds of the people that we cannot handle this. All of us must learn to sacrifice. What I am telling is, we will be in a more difficult situation if the government cannot do anything to cushion the impact of the disaster and the crisis,” Gordon said.
Senate Majority Leader Francis Pangilinan said he is amenable to proposals that will help alleviate the plight of our countrymen.
The DOF is particularly weighing the revenue impact of the proposed specific tax on oil under House Bill 4268 filed by Rep. Exequiel Javier, chairman of the House ways and means committee.
According to Javier’s proposal, the specific tax on oil will be based on the volume of oil. As such, the tax will be fixed despite increases in the price of oil. Under the proposed measure, the price of oil by which the tax will be based will be fixed at $103.50 per barrel.
With this cap, the amount of value-added tax on oil is converted to specific tax. This means that any increase in the price of oil beyond $103 per barrel will no longer be taxed.
Sen. Juan Miguel Zubiri said he favors the suspension of VAT on oil on a limited basis, such as diesel for public transport and trucking sectors.
VAT ‘shields the nation’
Amid mounting calls to scrap the VAT on oil, President Arroyo remained firm yesterday in retaining the tax on oil, saying revenues from it have been able to “shield our nation from the worst effects” of the global food and fuel crises.
In her speech before members of the 4th Ambassadors, Consul-Generals and Tourism Directors Tour at Malacañang, Mrs. Arroyo said with global oil and food crises, the Philippines is now in “uncharted waters that we must navigate in the new and uncertain era.”
But because of the fiscal reform measures she pushed and implemented years ago, the “world crises did not catch us unprepared or without reserves.”
She said the administration remains committed to its fiscal policies and the best solution to the crises is the one that has worked.
She said the VAT raised new revenues to fund the construction of more bridges, roads, ports and other infrastructure to create more opportunities for new wealth and new jobs.
“We are sticking to and we are widening the fiscal reforms that have earned us the respect of international finance, bringing our interest rates down and making our peso stronger,” Mrs. Arroyo said.
Mrs. Arroyo also said as the world food prices continue to rise, the price of rice in the Philippines is still cheaper compared to other Asian nations.
She said in Thailand, the price of rice is P56 per kilo, while in Vietnam it is P67. Thailand and Vietnam are the sources of the country’s imported rice, which are now being sold at P18.25 and P25 per kilo by the National Food Authority (NFA).
As of today, commercial rice is sold in the market from P35 to P40. “So when we have commercial rice sold at P35, that’s a blessing,” she said.
The President said compared to the P25.30 per kilo in Indonesia and P27 per kilo in Malaysia, the P18.25 and P25 subsidized rice in the country are still cheaper.
The President also said the government’s best response in the longer term to address the global commodity crisis is building up tourism, primary exports and business process outsourcing in the country.
The United Opposition (UNO) is urging Malacañang to seriously rethink its decision to use its P9-billion surplus from the collection of the 12-percent VAT on oil to provide more subsidies.
‘Crisis another PR opportunity’
UNO president Jejomar Binay said “the Arroyo administration apparently sees the economic crisis as another opportunity for PR gimmickry, rather than a challenge to implement long-term solutions.”
Binay, also mayor of Makati City, said the government’s “knee-jerk response” of providing subsidies will be counter-productive in the long run since the surplus will be spent on projects conceived with minimal planning and without any clear indications of transparency.
“What we need, and what the national government has failed to provide, are long-term solutions to the economic problem besetting millions of Filipinos,” he stressed.
Binay said he couldn’t understand Malacañang’s insistence on retaining the VAT on oil when it has already met its collection target and earned a surplus of P9 billion.
“Insisting on retaining the VAT on oil shows gross insensitivity to the plight of the poor and the middle class,” he said.
“Government has made a killing from the misery of the poor and middle-class that suffer from the effects of high taxes on expensive oil,” he added.
Malacañang earlier maintained its decision to retain the VAT on oil even as collections have almost reached this year’s target.
National Economic and Development Authority director general Augusto Sanchez had said the surplus collection would be used for subsidies to the poor, but Binay said he doubts if the additional subsidies will have a significant impact on the economic condition of Filipinos.
“Given the sorry track record of the administration in keeping transactions aboveboard and transparent, there is the real danger that the money will just go down the drain,” he said.
Senators are likely to support the proposal of the Department of Finance (DOF) that seeks to replace the value-added tax (VAT) on oil with a specific tax.
Sen. Francis Escudero, chairman of the Senate ways and means committee, welcomed the position of the finance department.
“That’s a positive development. At least, they are taking a second look and not rejecting proposals outright. I hope they will act on it with dispatch,” said Escudero, who has been calling for the removal of VAT on oil.
Sen. Aquilino Pimentel Jr. said he has been pushing for the imposition of specific tax but he argues that under the circumstances, the price of oil with tax remains higher compared to no tax at all.
However, Sen. Richard Gordon stressed the need to retain VAT, particularly now that the government needs funds to help the victims of typhoon “Frank” that ravaged several provinces in the Visayas and Mindanao.
“I don’t think I agree with that. I think if you take out VAT, it will benefit the rich who are consuming a lot more than the poor. The poor can only afford the basic daily needs but the rich have more, they have cars and extra money to buy things,” Gordon said.
“As far as I am concerned, I think it is a question of judgment. I am laying my political opinions on this. I am not afraid to decide on that if I am the one who needs to decide. Here are the funds for infrastructure that will cater to self-sustaining food security and create new jobs,” Gordon said.
Gordon said he does not want VAT used as a subsidy for the people who will just always rely on dole-outs.
He agreed with Sen. Edgardo Angara’s argument that the government will face bigger economic problems once VAT is removed.
“A budget deficit in an inflationary situation will be explosive. We have to tell the people that sometimes, we have to bite the bullet. Stop closing the minds of the people that we cannot handle this. All of us must learn to sacrifice. What I am telling is, we will be in a more difficult situation if the government cannot do anything to cushion the impact of the disaster and the crisis,” Gordon said.
Senate Majority Leader Francis Pangilinan said he is amenable to proposals that will help alleviate the plight of our countrymen.
The DOF is particularly weighing the revenue impact of the proposed specific tax on oil under House Bill 4268 filed by Rep. Exequiel Javier, chairman of the House ways and means committee.
According to Javier’s proposal, the specific tax on oil will be based on the volume of oil. As such, the tax will be fixed despite increases in the price of oil. Under the proposed measure, the price of oil by which the tax will be based will be fixed at $103.50 per barrel.
With this cap, the amount of value-added tax on oil is converted to specific tax. This means that any increase in the price of oil beyond $103 per barrel will no longer be taxed.
Sen. Juan Miguel Zubiri said he favors the suspension of VAT on oil on a limited basis, such as diesel for public transport and trucking sectors.
VAT ‘shields the nation’
Amid mounting calls to scrap the VAT on oil, President Arroyo remained firm yesterday in retaining the tax on oil, saying revenues from it have been able to “shield our nation from the worst effects” of the global food and fuel crises.
In her speech before members of the 4th Ambassadors, Consul-Generals and Tourism Directors Tour at Malacañang, Mrs. Arroyo said with global oil and food crises, the Philippines is now in “uncharted waters that we must navigate in the new and uncertain era.”
But because of the fiscal reform measures she pushed and implemented years ago, the “world crises did not catch us unprepared or without reserves.”
She said the administration remains committed to its fiscal policies and the best solution to the crises is the one that has worked.
She said the VAT raised new revenues to fund the construction of more bridges, roads, ports and other infrastructure to create more opportunities for new wealth and new jobs.
“We are sticking to and we are widening the fiscal reforms that have earned us the respect of international finance, bringing our interest rates down and making our peso stronger,” Mrs. Arroyo said.
Mrs. Arroyo also said as the world food prices continue to rise, the price of rice in the Philippines is still cheaper compared to other Asian nations.
She said in Thailand, the price of rice is P56 per kilo, while in Vietnam it is P67. Thailand and Vietnam are the sources of the country’s imported rice, which are now being sold at P18.25 and P25 per kilo by the National Food Authority (NFA).
As of today, commercial rice is sold in the market from P35 to P40. “So when we have commercial rice sold at P35, that’s a blessing,” she said.
The President said compared to the P25.30 per kilo in Indonesia and P27 per kilo in Malaysia, the P18.25 and P25 subsidized rice in the country are still cheaper.
The President also said the government’s best response in the longer term to address the global commodity crisis is building up tourism, primary exports and business process outsourcing in the country.
The United Opposition (UNO) is urging Malacañang to seriously rethink its decision to use its P9-billion surplus from the collection of the 12-percent VAT on oil to provide more subsidies.
‘Crisis another PR opportunity’
UNO president Jejomar Binay said “the Arroyo administration apparently sees the economic crisis as another opportunity for PR gimmickry, rather than a challenge to implement long-term solutions.”
Binay, also mayor of Makati City, said the government’s “knee-jerk response” of providing subsidies will be counter-productive in the long run since the surplus will be spent on projects conceived with minimal planning and without any clear indications of transparency.
“What we need, and what the national government has failed to provide, are long-term solutions to the economic problem besetting millions of Filipinos,” he stressed.
Binay said he couldn’t understand Malacañang’s insistence on retaining the VAT on oil when it has already met its collection target and earned a surplus of P9 billion.
“Insisting on retaining the VAT on oil shows gross insensitivity to the plight of the poor and the middle class,” he said.
“Government has made a killing from the misery of the poor and middle-class that suffer from the effects of high taxes on expensive oil,” he added.
Malacañang earlier maintained its decision to retain the VAT on oil even as collections have almost reached this year’s target.
National Economic and Development Authority director general Augusto Sanchez had said the surplus collection would be used for subsidies to the poor, but Binay said he doubts if the additional subsidies will have a significant impact on the economic condition of Filipinos.
“Given the sorry track record of the administration in keeping transactions aboveboard and transparent, there is the real danger that the money will just go down the drain,” he said.