Reverse VAT to ease impact of oil price hikes, gov’t urged

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Photo by BICOLTODAY.com
Photo by BICOLTODAY.com

MANILA, Philippines – With the public bearing a new round of oil prices hikes, research group IBON reiterates its call for government to reverse the value-added tax (VAT) on petroleum products, saying that gasoline and diesel pump prices could be lower by Php5.70-6.60 per liter.

According to IBON, consumers of regular gasoline would have paid only Php48.26 per liter and not the current Php54.85 without the VAT. Diesel, meanwhile, would have been priced at only Php41.45 per liter without the VAT. (See table)

Oil product Price with VAT Price without VAT Difference
Regular gasoline 54.85 48.26 6.58
Diesel 47.10 41.44 5.65

The VAT on petroleum products is one of the largest sources of revenues for the government. Yearly since 2006, oil VAT revenues averaged Php48 billion. Pres. Aquino thus recently again rejected calls to even at least bring the VAT percentage on oil amid the increasingly harsh impact of high oil prices on the public.

IBON stressed that contrary to government claim, the bulk of VAT revenues (58%) do not go to social services but to debt payments, and that government should find alternative measures to raise revenues that are less heavy on consumers.

Pump prices of diesel and gasoline have increased 11 times from January to April, bringing a total increase of Php8.35 per liter for diesel and Php6.50 per liter for regular gasoline.

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