The chairman of the House committee on ways and means yesterday expressed opposition to the proposal to suspend the 12-percent value-added tax on oil products, which would result in huge foregone revenues for the government.

Rep. Exequiel Javier (Lakas-CMD, Antique) warned that suspending the VAT on oil products would bring back in the deficit problem of the government, a House press statement said..

"I am against the suspension of VAT on oil which would translate to a revenue loss of P54 billion. We will be back in deficit which will weaken the peso and affect the exchange rate and increase the price of oil in terms of pesos, thus, canceling the effect of VAT suspension," said Javier.

A change in the government's tax policy would be ill-timed said Javier. "We should not change the tax policy when we are reaping its benefits like lower deficit and strong peso which cushioned the impact of rising oil price in the world market on domestic price of oil."

The rise in world price is only a spike and will probably stabilize after winter according to Javier.

"We wait until the end of winter. If the rise in oil price still goes unabated after winter, then we should consider our options," said Javier.

The Department of Finance earlier objected to the VAT suspension on oil products, which would translate to revenue losses for the government of P54 billion this year alone.

Reza Baqir, International Monetary Fund resident representative in the Philippines, meanwhile warned that lifting the 12-percent VAT on oil products will give investors a bad impression of the Philippines and will benefit the rich and hurt the poor, who gain from social programs funded by VAT.*

back to top