Lawmaker files bill scrapping 12% VAT on oil

MANILA, Philippines - San Juan Rep. Joseph Victor “JV” Ejercito has filed a bill that seeks to scrap the 12-percent value added tax (VAT) on gasoline, diesel and other oil products.

 “Instead of having another dole-out program such as the Pantawid Pasada program, it is high time to provide an immediate relief for the people from the increasing cost of oil by exempting oil products from VAT,” he said in filing Bill 6014.

“The Pantawid Pasada program of the government falls short at overcoming the burden of the Filipino masses. Neither the bus, jeepney, and taxi operators nor drivers agree it is the solution to the skyrocketing cost of gasoline, diesel, kerosene, and cooking gas. It does not benefit the people at all,” he said.

Ejercito, who chairs the House committee on Metro Manila development, said every increase in the price of oil products has a domino effect on fares and on the prices of prime commodities.

“This situation, if not abated, will certainly retard our economic growth targets and create widespread poverty among our people,” he added

He pointed out his bill would not deprive the government of VAT revenues since petroleum products are just few of a wide range of consumer products and services that are subject to VAT.

It will not even mean that oil products would be tax-free since the government would continue imposing an excise tax on some of these products like gasoline, he said.

He proposed that collections from oil VAT be replaced with revenues from the Philippine Gaming and Amusement Corp. (Pagcor), Philippine Charity Sweepstakes Office (PCSO) and the Malampaya natural gas project in Palawan.

“These revenues should be included in the annual national budget instead of being treated as off-budget items subject to the full control of the Office of the President,” he said.

He said remittances from Pagcor, PCSO and the Malampaya natural gas project would be more than sufficient to replace funds to be lost from the proposed scrapping of oil VAT.

He said the projected gross income of Pagcor for 2012 is P45 billion, while those of the PCSO and Malampaya are P31 billion and P43 billion, respectively.

Another congressman, Teddy Casiño of Bayan Muna, said consumers would be hit by a “Lenten double whammy” in the firm of high prices of fuel and electricity.

He said President Aquino was “being insensitive” to the suffering of the people, particularly the poor.

The Energy Regulatory Commission (ERC) this week granted the state-owned National Power Corp. and Meralco their petitions for a new round of power rate hikes starting in May. 

On top of high power rates, people have to cope with almost weekly oil price increases, Casiño said.

“Nobody is buying the Palace’s Pontius Pilate argument that it merely inherited the Mindanao power crisis and is powerless to prevent oil and electricity rates from increasing,” he said.

“The Aquino government has been in power for almost two years now. The question is, what have our officials done to correct the mistakes of previous governments? It seems all they are doing is washing their hands,” he said.

He said even the World Bank has called attention to the fact that the country’s electricity rates are among the highest in Asia and the entire world.