Pro-poor VAT on oil pure hogwash

THE Aquino administration has been reaping a P1-billion-windfall for every dollar increase in the price of oil because of the value-added tax, yet it has cut its spending on public hospitals and state-owned universities, lawmakers said Wednesday on the eve of a nationwide protests against rising fuel prices.

“The argument that VAT collections go to the poor is pure hogwash,” Gabriela Rep. Luz Ilagan said.

“The Aquino government should stop holding social services hostage in attempts to crush the people’s just and timely demands to remove the 12- percent VAT on oil and petroleum products.”

Ilagan said the government was expected to earn P26 billion from the tax on oil this year, but it had slashed P970.6 million from the Heart, Lung and Kidney Centers and P200 million from six other public hospitals in Metro Manila in the 2012 budget, Ilagan said.

She said the government cut P147 million from the budget of state universities and colleges and allocated only P2.9 billion to hire 13,000 teachers when 104,000 were needed.

The opposition and more allies of President Benigno Aquino III, including Batangas Rep. Hermilando Mandanas of the ruling Liberal Party, joined seven other party-list lawmakers — Reps. Teddy Casiño and Neri Colmenares of Bayan Muna, Ilagan and Emmi de Jesus of Gabriela, Rafael Mariano of Anakpawis, Raymond Palatino of Kabataan, and Antonio Tinio of ACT Teachers — in pressing the President to stop the weekly oil price increases.

On Wednesday, Mandanas and House Minority Leader Danilo Suarez and Deputy Minority Leader Maria Milagros Magsaysay attended and supported a forum hosted by Casiño, De Jesus and Tinio.

“The government’s VAT collection did not benefit the poorest Filipino families,” Ilagan told the forum.

“This is clearly illustrated in President Aquino’s inadequate spending for social services like health and education.”

Casiño said the projected P26-billion windfall in revenues from the tax on oil for 2012 was “an unjust and oppressive burden on the people that has no place in a government that professes to be for the poor.”

He accused the government of raking in billions at the expense of public interest.

“Considering that there is a P1 billion additional VAT revenue for every dollar increase in Dubai crude, there is already a P4-billion VAT windfall for the first quarter of this year alone. Assuming that there is no huge change in the volume of consumption and the level of prices for the rest of the year, we can say that the projected windfall VAT revenues for 2012 is P26 billion,” Casiño said.

He based his estimates on the average price of Dubai crude in February 2012, which was $116 a barrel against the Palace’s cost assumption of $90.

“The government is earning too much through the VAT but refuses to give some of it back to the people,” Casiño said.

He said the rationale for imposing the VAT on oil seven years ago no longer held true.

“The VAT was increased to 12 percent and expanded to include oil, power and basic commodities in 2005 as a response to the fiscal crisis of 2004,” Casiño said.

“Now, seven years have passed and we are being told that the economy is doing well … Therefore, there is no more basis for such a high VAT rate.”

Casiño said removing the tax on oil would immediately cut diesel prices by P6 a liter and gasoline by P7.

But Malacañang again rejected the calls to reduce or suspend the VAT on oil.

In the House, Rep. Danilo Suarez and other opposition lawmakers urged the President to exercise political will to address the skyrocketing fuel prices.

Rep. Milagros Magsaysay demanded that Energy Secretary Jose Almendras come up with a blueprint on how his department would address the spiraling fuel costs. –Christine F. Herrera and Joyce Pangco Pañares with Maricel Cruz, Manila Standard Today