Government sees P70 billion from VAT on oil

MANILA, Philippines – The government may earn up to P70 billion from the value-added tax (VAT) on oil this year because of higher crude prices, according to estimates from the Department of Finance (DOF).

The government initially projected a P52 billion revenues from VAT on oil for 2011 but with oil prices skyrocketing in the world crude market, fiscal authorities said the actual income from the tax could reach P60 to P70 billion.

In coming up with the estimated earnings of P52 billion for the year, the DOF put the price of oil at $80 per barrel.

The price of oil in the world market, however, has been steadily going up and has now hit $110 per barrel, according to government data.

Finance Undersecretary Gil Beltran said that in the first two months of the year, the windfall from VAT on oil reached P1.2 billion because the price of oil has gone up from the assumed $80 per barrel.

Of the P1.2 billion, the government earned P500 million in January and P700 million in February from the higher price of oil. “That’s just the preliminary figures,” Beltran said.

The DOF assured that revenues generated from VAT on oil especially the windfall would be used for budgetary purposes and as much as possible, to mitigate the impact of higher oil prices.

Part of the proceeds of the VAT on oil would be tapped for the Aquino administration’s fuel subsidy program for the transport sector.

Under the administration’s Pantawid Pasada program, the government would initially allot P450 million to assist jeepney and tricycle operators.

The program partially subsidizes the average consumption of identified public transport groups with legitimate franchises from the Land Transportation Franchising and Regulatory Board. –Iris C. Gonzales (The Philippine Star)