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DESPITE
concerns on the fiscal impact of the proposal, many
parties are agreed removing the expanded value-added tax
(E-VAT) on petroleum either temporarily or permanently
would have the greatest effect in cushioning prices for
the masses.
The
Bagong Alyansang Makabayan (Bayan) is understandably all
for the permanent removal by repealing the
oil-deregulation law, while Consumer and Oil Price Watch
(COPW) chairman Raul T. Concepcion is for a temporary
reduction in the rates.
A
warning was aired by Palace lawyers on Monday, though.
Chief Presidential Counsel Sergio Apostol said President
Arroyo may be impeached if she orders even just the
suspension of the E-VAT, not to say to remove it,
because this can be done only through legislation.
Still,
the COPW has pinned its hopes for relief on the energy
summit planned by the Executive.
“At the
upcoming energy summit, we will propose to the
government to lower the VAT percent for the month of
February and March, which are winter months for some
countries that make its inhabitants consume more fuel
for heating and traveling and push world oil prices
higher,” said Concepcion Monday.
The
Energy Summit workshop is tentatively scheduled for
January 29 to 31, while the forum proper would be on
February 5.
Concepcion said the government could consider such a
temporary reduction instead of removing E-VAT—which will
reduce government revenues from petroleum products that
he estimated at about P52 billion on an annual basis, or
P4.3 billion a month.
But
Bayan said lifting the 12-percent E-vat on petroleum
products would immediately bring down gasoline prices by
P4 to P5 per liter and diesel prices by P4 per liter as
it slammed the tariff reduction scheme. Comparable
Department of Energy estimates are around P4 per liter
on the average for all motor fuels.
Bayan
said reducing tariff rates will not protect the public
from skyrocketing pump prices because at the current
pace of unregulated oil price movement and with
continuing speculation in the global market, pump prices
are expected to post an overall increase of as much as
P2 per liter in the first quarter of the year alone.
It said
this would easily negate the expected 20- to 25-centavo
reduction in pump prices resulting from the planned
1-percent oil tariff reduction.
But
Chief Presidential Counsel Sergio Apostol said Monday
that President Arroyo may be impeached if she orders
even just the suspension of the E-VAT. Apostol said
those pushing for the suspension of the E-VAT on oil
products should instead channel their efforts toward
Congress instead.
In any
case, Bayan said that with oil tariffs being taxes
imposed by the government on oil companies and the E-vat
on petroleum products being a tax that all people
regardless of income and employment directly pay,
removal is the only effective solution.
Otherwise, “the Arroyo regime’s proposal of reducing
tariff rates will only protect the profits of the oil
companies with negligible positive impact on pump
prices.”
It
added, “The only truly beneficial measure at this point
of unprecedented oil prices is to have the oil
deregulation law repealed and the E-vat on oil products
permanently removed, which are not included in the
Arroyo government’s planned energy summit.”
Apostol
explained that while the President can act on tariffs,
as she had done when she reduced oil tariffs last week,
because the Chief Executive has a “delegated authority
on tariffs” she has, however, no such delegated
authority on taxes.
So,
would the President certify legislation to reduce or
remove the E-vat on oil? He said, “I think she will
leave it that way.”
Apostol
added he expects Mrs. Arroyo not to veto such a measure
should it ever reach her office. “I doubt if she will.
The government will lose about P54 billion but I doubt
if the President will block it.”
On
Concepcion’s planned proposal, Apostol said, “An [E-vat]
moratorium. . .on oil and petroleum products cannot be
legally ordered by the President. [It] would be against
the principle of separation of powers ingrained in the
Philippine Constitution. The E-vat is a congressional
act and cannot be suspended by the Executive
department.”
Concepcion
insists on his proposal, however, but he was not clear
on whether he accepts it needs legislation to be
realized. “In general, what we do not want is for the
transport sector to ask for a transport fare increase,
resulting in a domino effect.”
The
moderate Trade Union Congress of the Philippines (TUCP)
“is inclined to agree” with Concepcion and Sen. Mar
Roxas, who had both proposed suspending the E-vat on oil
for at least six months.
But the
TUCP acknowledges it would require legislation. “Our
sense is that the proposal to temporarily lift the VAT
on petroleum products should at least be mindfully
examined by Congress. It should likewise be considered
during the energy summit later this month.”
“Some
policymakers may not see the E-VAT suspension as
absolutely necessary at this time. But surely, if oil
prices continue to climb and stay above $100 per barrel
for an extended period, then Congress will likely face
mounting pressure to act,” added Aguilar.
“Oil is
priced in dollars. And oil-producing countries are
getting less value for their money owing to the US
currency’s considerable decline relative to most other
currencies. Thus, we suspect that oil-rich countries
will continue to find ways to exert upward on prices,”
said Aguilar.
Aguilar
urged, meanwhile, the tax administrators to also focus
on building up E-vat enforcement and compliance in other
sectors of the economy.
“Our tax
administrators are apparently too preoccupied with Evat
enforcement in the energy sector because these are the
easiest to collect. In the meantime, Evat compliance in
other sectors, such as telecommunications, or among
highly paid professionals, remains very weak.” |
