TUCP calls for suspension of VAT coverage on petroleum products and electricity

The Trade Union Congress of the Philippines (TUCP) today appealed to both the executive and legislative departments to temporarily exclude petroleum products and electricity from the coverage of the expanded-value tax (E-VAT).

TUCP’s statement came after the Supreme Court yesterday ruled on the constitutionality of the law and paved the way for the E-VAT’s implementation by next month.

The TUCP made the appeal amidst surging oil prices and its inflationary effects on prices of goods and services. TUCP stressed that coverage of oil and electricity will result to a regime of high prices and will force workers to demand for more wage adjustments.

“As it is, many workers hardly make both ends meet. The price spikes that will be caused by the E-VAT on fuel and electricity will send prices over the roof and will push more people to poverty”, TUCP said.

TUCP stressed that oil and electricity accounts for a substantial portion of production costs particularly in the manufacturing and food sectors. This according to TUCP will also force employers to slow down their operations or resort to painful cost-cutting measures.

Analysts predict that fuel prices will increase further by another P3.00 with the EVAT. On the other hand, households will have to cough up another 10% for their monthly electric bills.

TUCP said that a suspension on the implementation of VAT coverage of oil and electricity can be done through Congressional action. TUCP supports the proposal of Albay Representative Joey Salceda to allow the phasing-in of VAT’s implementation.

Under the proposal other provisions of the VAT law can already be implemented while coverage on oil and electricity can be postponed to a latter date. TUCP recommended that the coverage of the VAT on the two essential items can be instituted when oil prices go back to normal levels.

TUCP earlier urged the Senate and the House of Representatives to exclude the two items from coverage of the expanded VAT saying that this will heavily impact of working families who already account for more than 70% of tax collections in the country.

TUCP said that it shall also support any move to amend the law to totally exclude oil and electricity from coverage of EVAT.