MARCH 30, 2012 DATE

NR # 2694
REF. NO.

House leader formalizes proposal to VAT-exempt petroleum products

Rep. Joseph Victor JV Ejercito (Lone District, San Juan City) has formalized his proposal to exempt the sale or importation of petroleum products from the value added tax through the filing of House Bill 6014 that aims to ease the burden of the people from the oil price hikes. Ejercito said instead of having another dole-out program such as the Pantawid Pasada Program, it is high time to provide an immediate relief for the people from the increasing cost of oil by classifying the petroleum product as a VAT-exempt transaction. The Pantawid Pasada program of the government falls short at overcoming the burden of the Filipino masses. Neither the bus, jeepney, and taxi operators nor drivers agree it is the solution to the skyrocketing cost of gasoline, diesel, kerosene and LPG. It does not benefit the people at all, he said. Ejercito, Chairman of the House Committee on Metro Manila Development stressed that every increase in the price of gasoline, diesel, kerosene and other petroleum-based products has a domino effect on the price of prime commodities. This situation, if not abated, will certainly retard our economic growth targets and create widespread poverty among our people. Although removing the VAT from the sale and importation of petroleum products would reduce government revenues, Ejercito said it is imperative to consider the incomes and revenues derived from the Philippine Amusement and Gaming Corporation (Pagcor), Philippine Charity Sweepstakes Office (PCSO) and the Malampaya gas project. These revenues should be included from the annual drafting of the national budget instead of being treated as off-budget items subject to the full control of the Office of the President. The funds from these sources are sufficient to replenish the lost revenues, Ejercito said. He cited that the projected gross income of Pagcor for FY 2012 is P45 billion while those of the PCSO and Malampaya are P31 billion and P43 billion respectively. When the Expanded VAT or Republic Act 9337 was enacted by Congress in 2004, its purpose was to address the prevailing looming crisis brought about by an unprecedented increase in national debt according to him. The economic situation then was (that) the countrys debt-to-gross domestic product ratio was at record high of 78.2 percent. Debt payments then were equivalent to 86.1 percent of government revenues which was unparalleled since 1986. However, in

MARCH 30, 2012 DATE

NR # 2694
REF. NO.

2012, the countrys debt-to-gross domestic product ratio fell to 55.4 percent, a large improvement from the 2004 level, Ejercito said. He said the economic team of President Aquino is committed to cutting the debt-togross domestic product ratio to 46 percent when his term ends. Furthermore, he said even the known financial and economic analysts forecast that the peso will strengthen and the Philippine economy will rebound this year. In HB 6014, Ejercito sought the amendment of Section 109 (1), Chapter 1, Title IV, Value Added Tax of RA 8424, otherwise known as the Tax Reform Act of 1997, as amended by RA 9337 so that the following transactions shall also be VAT-exempt: Sale or importation of petroleum products (except lubricating oil, processed gas, grease wax, petrolatum, and coal and natural gas in whatever form or state) subject to excise tax imposed under Title VI; and Sale or importation of raw materials to be used by the buyer or importer himself in the manufacture of petroleum products subject to excise tax, except lubricating oil, processed gas, grease, wax and petrolatum. (30) rbb