REVIEW URGED Jaro Archbishop Angel Lagdameo (center), president of the Catholic Bishops’ Conference of the Philippines, asks the government to review the laws on the expanded value-added tax (VAT) and oil deregulation. Making the call with him are Bishop Broderick Pabillo (left) and Archbishop Antonio Ledesma (right) at the end of the CBCP’s two-day plenary assembly on Monday. ERIK ARAZAS
MANILA, Philippines—The Catholic Bishops’ Conference of the Philippines (CBCP) Monday urged the government to review the laws on the 12-percent expanded value-added tax (VAT) and oil deregulation, saying these add to the burdens of the poor already groaning from soaring prices of goods and services.
The CBCP made the call a day after its two-day plenary assembly ended.
The bishops led by the CBCP president, Jaro Archbishop Angel Lagdameo, said it was high time that the government reconsidered its economic policies that affect prices.
(The inflation rate rose 11.4 percent in June from a year ago, the highest in 14 years. The price of rice alone jumped 43 percent, while that of food in general rose 17.4 percent. Food accounts for 60 percent of a poor family’s consumption, according to economists.)
“We are in favor for an economic review especially those pertaining to the rise in prices because the poor are feeling the brunt of it. Out of sympathy for them, there must be a review of all our laws related to prices of goods, like gasoline,” Lagdameo said at a press conference at the San Carlos Seminary in Makati City.
In particular, the CBCP president said the government should review the laws on VAT and oil deregulation.
Windfall from VAT
VAT allows the government to collect bigger and bigger revenues as the prices of goods and services shoot up, as what’s happening these days. Because of soaring prices, the government is getting a windfall from the VAT on petroleum products.
Last month, the Department of Finance said the government could collect P18.6 billion in additional VAT revenue this year because of the soaring fuel prices.
The oil deregulation law enables oil companies to raise prices without government intervention. Before the oil industry was deregulated in 1998, oil firms had to apply for any price increase with the Energy Regulatory Board, now the Energy Regulatory Commission.
First time
Msgr. Pedro Quitorio, the CBCP spokesperson, said it was the first time that the CBCP leadership spoke against the oil deregulation law.
He said 87 prelates attended the meeting. The CBCP is composed of 131 active and retired bishops.
Oil companies in the country on Saturday raised fuel prices for the 18th time since January. Gasoline now costs more than P60 a liter, up 50 percent since June last year.
In the international market, crude oil prices have increased 60 percent since January to $144 a barrel and 112 percent since July last year, causing the global economy to slow down.
Palace noncommittal
Malacańang was noncommittal to the CBCP call for it to review the VAT on oil and the oil deregulation law.
Press Secretary Jesus Dureza said the Palace would refer the proposal of the bishops to the economic managers.
But Energy Secretary Angelo Reyes welcomed the CBCP call to review Republic Act No. 8479, or the Downstream Oil Industry Deregulation Act of 1998, in light of the current oil price situation.
“I’m certain that Congress will find the needed and appropriate legislation to mitigate, if not solve, this problem [food and energy crisis],” Reyes said in a text message sent to the Philippine Daily Inquirer (parent company of INQUIRER.net).
President Gloria Macapagal-Arroyo earlier rejected calls for the scrapping of the VAT on oil. She has set aside P4 billion from initial revenues generated by the VAT on oil to help the poor cope with the rising cost of food and fuel.
Ms Arroyo plans to spend P2 billion in subsidy for small electricity users, P1 billion in scholarships and loans for poor students, and another P1 billion in loans to help bus, taxi and jeepney owners convert their engines into units that run on the more economical LPG (liquefied petroleum gas) and compressed natural gas.
Lasting solutions, not dole
Instead of giving doles to the poor, the CBCP said the government should focus on providing long-lasting solutions based on economic reforms.
Bishop Broderick Pabillo, chair of the CBCP-National Secretariat for Social Action-Justice and Peace, said it appeared that the government’s cash assistance to the poor was ineffective.
He noted that the cash assistance only reached the poor in the cities and not those in the provinces.
Ground for corruption
There is also the problem of accounting, Pabillo said. “Where does the money go? Who gets it? It’s a fertile ground for corruption,” he said.
Pabillo said the VAT law seemed to be benefiting only government officials. The law has become a burden to the public, which has to pay higher taxes because the base price has gone up, he said.
“Maybe VAT could be reviewed because every increase in price means a bigger tax. In a way, the rise in the prices of commodities is an advantage to the government—it gets a lot of revenues. We should try to see if it seriously helps the people,” Pabillo said.
Suspend VAT on fuel
The bishops have found an ally in Sen. Manuel “Mar” Roxas II who said suspending the VAT on oil would lead to substantial savings on fuel expenses by the public.
Roxas noted that when the VAT on oil was imposed in 2005, the price of crude oil was only $30 a barrel and the government would be collecting only $3.60 in VAT per barrel.
Now that oil is at $140 per barrel, the government is collecting more than $15 per barrel.
“Government collections are now overflowing and it is asking us to tighten our belts. Why must the people suffer? Why not the government? Those taxes are our money,” Roxas said.
Senior citizens’ discount
Lagdameo said the implementation of the VAT law should be assessed, citing the experience of senior citizens.
The CBCP president noted that some establishments like restaurants were not fully implementing the 20-percent discount granted to senior citizens because they subject them to the VAT.
“The 20-percent discount minus 12-percent VAT means their discount is only 8 percent. It’s a pity that a senior citizen only gets 8 percent discount,” he said.
The bishops said it had always been the poor, especially those in the rural areas, who suffered in times of economic crisis. The high cost of fuel, the bishops said, was affecting almost all commodities.
Going organic
Farmers in the dioceses in Mindanao have gone organic, because petroleum-based pesticides and insecticides have become too costly, according to Cagayan de Oro Archbishop Antonio Ledesma, who heads the National Rural Congress II.
“The price of oil is increasing and this is why farmers now find it more expensive if they stay with conventional or chemical-based agriculture,” Ledesma said.
In the opening statement he read during the press conference, Lagdameo said much of the nation’s wealth came from the agricultural and fisheries sector, yet farmers and fisherfolk remained the country’s poorest.
“Today, we can still say that while efforts have been made in the past to redress the imbalance between the rich cities and poor countryside, much still remains to be done,” he said.
Aside from discussing the plight of the poor, the CBCP also tackled environmental, land reform and reproductive health issues, Lagdameo said.
Extend CARL
Ledesma said the bishops were constantly pressing for the extension of the Comprehensive Agrarian Reform Law (CARL). Although the landmark law expired last month, its provision on land acquisition and distribution are still in effect until December.
Agrarian Reform Secretary Nasser Pangandaman said he was also pushing for the extension of CARL, especially its land acquisition and distribution component.
Logging, mining
The devastation brought by Typhoon “Frank” (international codename: Fengshen) in the Visayas and Mindanao had revealed the effect of the mining and logging industries, according to Church officials.
Recently, the CBCP officials said mountains stripped of forests to make way for logging, mining and quarrying had made low-lying villages and cities helpless against the tide of rushing waters and logs from the mountains.
One town in Iloilo, Lagdameo said, saw the equivalent of 10 hectares of topsoil crashing down on it, destroying houses.
As to reproductive health, the prelates said they were alarmed by reports that there were “anti-life” bills in the House of Representatives. Pabillo said the bishops would lobby against the bills. With reports from Christine O. Avendańo, Abigail L. Ho, Gil Cabacungan Jr. and Amy R. Remo
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