Villar backs public transport subsidies amid oil crisis
By Dona Pazzibugan
Philippine Daily Inquirer
First Posted 20:02:00 05/26/2008
Filed Under: Oil & Gas - Downstream activities, Road Transport
MANILA -- Senate President Manuel Villar has joined calls for government to ease the impact of skyrocketing prices of petroleum products by subsidizing transportation costs.
Instead of calling for a suspension of the 12 per cent value added tax (VAT) imposed on petroleum products, Villar asked the government to subsidize transportation costs by making use of proceeds from the expanded value-added tax.
He said the government could afford to give such a subsidy since it stood to earn in 2008 an additional P18 billion from VAT due to the surge in oil prices in the world market.
Oil firms have announced they would increase their pump prices weekly to recover their losses.
"Most of us (legislators) prefer to simplify the VAT. But for me, the most practical way is for the DOF (Department of Finance) to give its proposal how it would subsidize the poor using the P18 billion from additional VAT on oil," Villar said.
He said the subsidy could take the form of a transportation subsidy.
"The problem with the DOF is, they don't want to suspend VAT but at the same time they do not present a proposal to help our poor," said Villar.
Senators Manuel Roxas II, Juan Miguel Zubiri, Francis Escudero and Ramon Revilla Jr. have publicly called for a suspension of VAT on oil products to stem the inflationary effect of rising oil prices.
Zubiri said the government's revenue loss in terms of decreased VAT collection would be "minimal" if the VAT suspension were limited to public utility vehicles such as buses, taxis and jeepneys as well as cargo trucks that transported basic goods.
Former senator Ralph Recto, however, said that removing VAT on oil products without any new revenue source would only hamper the government’s ability to provide basic social services.
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