|
MALACAÑANG continues to veto the idea of any value-added
tax (VAT) reduction or removal as the Catholic bishops
prepare to meet President Arroyo on what to do with VAT
to ease the people’s burden. This, as the Energy
department proposes even more subsidies, earlier slammed
as wrong policy by the Association of Southeast Asian
Nations.
Finance
Undersecretary Gil Beltran said on Wednesday the
selective reduction of the VAT such as on oil may be
imprudent, since it would expose the tax to possible
abuse such as use of transfer pricing in order to defeat
the tax in goods where the VAT had not been reduced—
thus reducing available government funds for social
services.
At the
weekly news briefing of Executive Secretary Eduardo
Ermita where Beltran met with journalists, he said the
best option is to let the government continue to collect
VAT on oil at 12 percent, and then spend the windfall on
programs that directly help the poor.
“Adopting different rates for different types of
products may not be a good tax policy because if you
have different rates, there’s a tendency for taxpayers
to transfer pricing, which means that they would
transfer prices to certain products wherein the taxes
are lower. There are many tax administration problems
attendant to having differential rates,” he said.
Meanwhile, the chairman of the Senate ways and means
panel wants to know whether the so-called VAT windfall
exists. Sen. Francis Escudero revealed that government’s
so-called windfall from the continued imposition of the
12-percent value-added tax on higher-priced oil has yet
to be reflected in the Bureau of Customs collections,
although motorists have long been paying the VAT of the
high pump prices.
“Is it
just a mirage?” he asked. Escudero added that being a
percentage tax, the VAT on oil shadows any movement in
the price of oil. “If oil prices [go] up, so does the
VAT, and so must overall Customs collections.”
But
instead of increasing, he added, BOC collection in the
first five months of the year is actually below target.
This, he said, prompted suspicions the Arroyo
administration’s vaunted VAT oil dividends is just “a
mirage.”
Citing
reports obtained by his committee, Escudero noted that
BOC’s 5-month collection reached P92.6 billion, which is
below its target of P94.4 billion. “Why the agency
continues to sputter in its collection despite recent
macroeconomic developments that tend to favor it is a
big puzzle.”
This
year’s BOC goal of P254 billion was pegged on
$62-$70/barrel of Dubai oil and an exchange rate of P46
to P48 to the dollar.
Imported
oil, however, has long breached the $100-dollar mark
with no sign of retreating, and the peso after flirting
with the 41 to a dollar level for the first quarter of
year, is still trading below the official government
forecast. “The BOC should be exceeding its target a long
time ago because two of its best friends—a weakening
peso and a rising price of oil—have come into play now.”
According to Escudero, “one possible culprit of flat
Customs revenues is government’s ancient nemesis:
smuggling.” He suspects that “due to its reliance on
‘tax advances’ from oil companies to prettify its
collection record, the BOC may have gone soft on oil
companies, the lenient treatment being quid pro quo for
the advances.”
In
noting the “disconnect between a supposed windfall in
oil VAT collection, on one hand, and actual Customs
collections, on the other,” Escudero also wondered aloud
where, then, will the government get its “katas ng VAT”
that is reportedly being used “to lubricate its rice and
power subsidy program?”
“Is the
President marketing and milking a fund source that is
nonexistent. . . . committed the age-old folly of
counting. . .chicks before they are hatched?”
Whatever
the Palace answer could be, the Department of Energy
(DOE) announced plans to find more ways to make oil
prices reasonable and affordable to consumers—through
expenditures schemes for propoor projects from oil tax
collections such as subsidies on basic needs (food,
shelter, education) for the rural and urban poor, small
fisherfolk and farmers, as well discounts to vulnerable
sectors.
“To
achieve this target, the DOE is actually revisiting the
taxation regime on petroleum crude and products,” said
Energy Secretary Angelo Reyes at the 30th National
Academy of Science and Technology conference on Energy
Security and Sustainability.
The
Catholic Bishops’ Conference of the Philippines (CBCP)
continued to push the idea, meanwhile, of reviewing the
VAT on oil and oil industry deregulation, which they
would bring to their scheduled meeting with President
Arroyo either late yesterday or today (Thursday).
Ermita
said the CBCP had requested the dialogue and will have
among its five representatives Cebu Archbishop Ricardo
Cardinal Vidal.
He said
Mrs. Arroyo welcomes the meeting, where she expects her
economic managers to explain the government’s position
on the CBCP stand, and expand on government measures
such as direct subsidies to the poor and other social
welfare projects.
Be that
as it may, windfall or no, Budget Secretary Rolando
Andaya Jr., who was also at Ermita’s briefing, said
another round of government subsidies is under way, to
be funded by another P4 billion from the “oil VAT
windfall” for the second quarter of the year. (Mia
Gonzalez, Butch Fernandez, Paul A. Isla) |
