JUNE 10, 2011

NR # 2431B

Solon seeks restoration of VAT exemption of petroleum and electricity sales A ranking House member is pushing for the restoration of the value added tax (VAT) exemption on the sale of petroleum products and electricity to provide relief to consumers from the ill-effects of the unabated increase in oil prices. Rep. Ma. Theresa Bonoan-David (4th District, Manila), author of House Bill 4554, said the increasing oil prices and the additional impact of VAT translate to higher consumer prices. Monitoring of consumer prices shows that consumer prices are following on the heels of oil price hikes. Prices of food, beverages and tobacco, clothing, housing and repair services, and fuel, light and water all track the price of oil. The increase in electricity rates also results in the rising cost of production, rising prices and rising consumer expenditures, said Bonoan-David, Vice Chairperson of the Committee on Globalization and WTO. Bonoan-David said the reformed VAT has made crude and petroleum products and electricity highly taxed commodities. Increased collection from RVAT is a gain for the government but has caused much pain to consumers since its imposition. Every peso raked in by the government is an additional burden on the consumer especially in times of rising oil prices, Bonoan-David said. Bonoan-David said the bill seeks to restore the exemption from VAT of the sale of petroleum products by amending the National Revenue Code of 1997. The bill seeks to amend Section 109, Chapter 1 of Title IV of the NRIC by excluding from the VAT the sale, importation of coal and natural gas, in whatever form and state, and petroleum products (except lubricating oil, processed gas, grease, wax and petrolatum) subject to excise tax imposed under Title VI. The bill also provides the VAT exemption of sales by distribution utilities relative to the generation and distribution of electricity as well as their importation of machineries and equipment, including spare parts, which shall be directly used in the generation and distribution of electricity. (30) rbb