Zambales Rep. Mitos Magsaysay has said that the government should not consider the proposed temporary reduction to Value Added Tax (VAT) on petroleum products as a short term solution to the problem but rather a sustainable marker to ease the plight of motorists and consumers nationwide in times of oil crisis.
“The government says that they cannot do away with a two percent reduction in VAT on oil because the revenue from the tax fuels many government projects but if you look at the big picture, it is only a small portion of government revenues and collection,” she said. “Programs will not cease to operate because of several months of reduced collections. But the impact will be felt immediately by consumers.”
The lawmaker explained that that VAT is an indirect tax which is passed on by businesses to their consumers directly and the reduction of VAT would result in a reduction of costs passed on to the end users. She said that if collection efforts are strengthened and tax evasion and smuggling are curbed, then the government will have more than sufficient taxes to fund their projects even with the temporary reduction of VAT.
“The thing is this temporary reduction is not going to be forever. It will return to normal once the prices of oil stabilizes in the world market. Collection, will in turn return to normal. If government experts will set the ceiling price of oil in order for the proposed measure to take effect and set the conditions when it will cease, then I see no problem with the set up. And each time oil prices fluctuate in the world market, we will have a basis to alleviate its impacts on the regular consumers.”
Magsaysay also said that another solution that can be utilized by the administration is the temporary lifting of excise taxes on oil and the adjustment on duties imposed on oil when it reaches a certain threshold. This, she said is a good way to maintain oil prices in the local market and has proven to be effective in the oil crisis in the previous administration.
In order to address the issue of skyrocketing cost of oil in the country, Magsaysay has been calling for the temporary reduction of VAT on petroleum products as well as filed a resolution before Congress to look into possible amendments to the 1998 Oil Deregulation Law.#