Militant think tank: Removing VAT on oil can stimulate

economy
04/29/2011 | 01:34 PM

Removing the value-added tax (VAT) on oil could stimulate the economy by boosting consumption spending,
non-government think tank IBON Foundation said Friday.
Also, the group said such move would help cushion consumers from the impact of skyrocketing world crude
prices.
IBON research head Sonny Africa explained that removing the VAT on oil would stimulate economic activity
through savings, saying that without the 12-percent VAT on oil, domestic pump prices would go down by as
much as P6 per liter.
These savings mean more money for consumers to spend directly on their needs, and less production costs
for fuel-intensive businesses" Africa said.
Economists, on the other hand, said scrapping the VAT on oil will lead to price distortions.
However, Africa claimed that the monopoly pricing and profiteering of oil companies, together with the oil
deregulation policy, are actually the factors that distort the prices.
He urged the Aquino administration to scrap the VAT on oil, saying that repealing the tax or implementing
price controls are not populist measures.
it takes a strong-willed government that has the welfare of the people in mind to implement these urgent
measures," Africa said.
Furthermore, Africa said the benefits" of scrapping the VAT on oil would help the transport sector and the
commuting public in terms of reduced prices and additional income.
The Department of Finance, meanwhile, remains firm with its position that scrapping the VAT on oil would be
detrimental to the governments fiscal position.
Estimates made by the Finance department showed that the government may earn roughly P70 billion from
VAT on this year from P45 billion last year.
Last week, Presidential Communications Operations Office head Herminio Coloma Jr. said Malacaang
has not yet closed its doors on moves to limit the VAT on oil, but stressed that such an option was last in a
range of priorities.
Also he said the government needs the revenues from the VAT as the government is still operating on a
deficit.
Hindi natin sinasabing walang pag-asa yan. Yan ay isa pa rin sa menu of options na naririyan ngunit sa
ngayon hindi yan kino-consider na prayoridad. Ang overall fiscal position ng pamahalaan, nasa deficit," he
said. LBG, GMA News

Repeal of VAT on oil not bad for economy

IBON NEWS | 20 April 2011 | Repealing the value-added tax (VAT) on oil will actually even spur economic
growth while mitigating the effects of oil prices on ordinary Filipinos.

Research group IBON disputed claims of some economists that repealing the value-added tax (VAT)
on oil will hurt the economy, saying that it will actually even spur economic growth while mitigating
the
effects
of
oil
prices
on
ordinary
Filipinos.
The group is reacting to the warning made by former economic managers of previous
administrations against implementing so-called populist measures like the repeal of the VAT on oil
products,
price
controls,
etc.
According to IBON research head Sonny Africa, removing the VAT on oil would stimulate economic
activity through savings to consumers on their fuel bills. It is estimated that without the 12% VAT, oil
pump
prices
would
go
down
by
as
much
as
P6
per
liter.
These savings mean more money for consumers to spend directly on their needs, and less
production
costs
for
fuel-intensive
businesses
Africa
said.
Reacting to the economists statement that these measures will lead to price distortions, Africa said
that the monopoly pricing and profiteering of oil companies, together with the oil deregulation
policy, are actually the factors that distort the prices. In fact, there is an unexplained difference in the
prices of diesel and regular gasoline of around Php5/liter and Php8/liter, respectively compared to
their
global
crude
oil
prices
in
the
first
quarter
of
the
year.
Repealing the VAT or implementing price controls are not populist measures, said Africa. On the
contrary, it takes a strong-willed government that has the welfare of the people in mind to implement
these
urgent
measures.
Ultimately, the welfare improvements to the countrys consumers and the public transport sector in
terms of reduced prices and additional incomes are more than enough reason for government to
implement pro-people measures like lifting the VAT on oil, Africa said. (end)

Diesel, gas prices could be cheaper by Php6/liter without

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

IBON News | 06 April 2011 | Consumers of regular gasoline would have paid o 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

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
have
been
lower
by
Php5.70-6.60
per
liter.
According to IBON, consumers of regular gasoline would have paid o 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

54.75

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 down 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 the total
increase of Php8.35 per liter for diesel and Php6.50 per liter for regular gasoline. (end)

IBON urges progressive specific tax system in place of VAT

on oil
IBON proposes an improved progressive system of specific taxes on unproductive sectors wherein
socially sensitive oil products diesel, LPG, and kerosene are exempted while personal, corporate income
and wealth-related taxes are higher.

If the Aquino government is seriously looking for measures that would cushion the impact of high oil
prices on consumers and the local economy, it should immediately reverse the imposition of the 12%
value-added tax (VAT) on petroleum products, said research group IBON Foundation.

Instead of the regressive VAT, IBON proposes an improved progressive system of specific taxes on
unproductive sectors wherein socially sensitive oil products diesel, LPG, and kerosene are exempted while
personal,
corporate
income
and
wealth-related
taxes
are
higher.
Government benefits extremely from oil price increases through the VAT on oil products. A Department
of Finance (DOF) official recently gave an estimate of Php4 billion in VAT windfall that government
expects to receive by end-March. However IBON argues that without the VAT, oil pump prices may go
down by as much as Php 5 per liter and will provide relief to a large number of consumers.
The savings from oil prices mean more money for consumers to spend directly on their needs. Local
establishments, particularly those whose operations are fuel-intensive, would also benefit from lower
operating or production costs. IBON added that, contrary to government claims, bulk of total revenues
from the VAT (58%) does not go towards much needed social services but to debt servicing. Moreover,
government can make up for revenue loss even if it scraps the VAT on oil through alternative revenue
measures
that
are
less
burdensome
to
consumers.
Government began imposing the 12% VAT on petroleum products in 2006, which compounded the
problem of soaring oil prices under a deregulated downstream oil industry. There have been nine rounds
of increases in diesel prices and eight rounds of gasoline price hikes since January 2011. These increased
the pump price of diesel to Php6 Php8.35 per liter and regular gasoline by Php6.25 in the first quarter.
Lastly, the research group stressed that the deregulation of the oil industry has burdened the people with
more exorbitant petroleum prices while oil firms are not required to justify their price increases. As global
prices of oil continue to rise, IBON renews its call to scrap the deregulation law to pave the way for state
control of prices. (en

http://ibon.org

"We oppose any moves to increase the rates...students and their parents would be severely burdened by the rate
increases," Joanna Armenta, a representative of St. Scholastica's College Student Council.
Ceasarie Santos, Chairperson of the University of the Philippines-Manila Student Council said that students' daily
allowance would be insufficient for them to ride the train everyday, given the price hike.
NUSP further explained that the fare hike would add to the "mounting cost of education in the country, aside from
yearly tuition and other fee increases, expensive textbooks and board and lodging."

DoE tells oil companies to explain price hike

MANILA, Feb. 17 (PNA)--The Department of Energy (DoE) is ordering oil companies to explain in writing the reason
for the adjustment in the prices of gasoline, diesel and E10 it implemented last weekend when prices of crude in
the world market remains stable.
Energy Secretary Angelo Reyes said "I asked the oil companies to explain this increases and I have given them 48
hours. Now, they have to put it in writing so that we will know and the publc will know [the reason for the
increase]."
Industrialist Raul Concepcion in a separate press briefing Monday asked DoE to compel the oil companies to explain
the price hike they imposed last Saturday on the pump prices of diesel, gasoline and E10.
This will ensure transparency and accountability that the prices of crude oil and finished products are in
accordance with global pricing,Concepcion, chairman of Consumer and Oil Price Watch (COPW) said.
According to Concepcion if oil companies bought forward their supplies, the March delivery prices will be at US$
33.98 NYMEX on February 12 and US$ 37.51 for the April delivery.
COPW will accept that pump prices went up because the Oil Refiners used MOPS, as they had to import finished
products diesel, gasoline, auto-gas, when they shutdown their refinery for maintenance in December and
January, Concepcion said.
"However, when the oil refiners resume refining in March, the benchmark will be Dubai or US NYMEX crude and
COPW expects automatic rollbacks or else, they will have to explain to the DOE and the general public why they
cannot [rollback], Concepcion concluded.
According to Reyes they are now checking the data of the oil companies in particular the dates of the acquisition of
the supply, the volume and value and the shipment date to determine if there is really reason for the oil firms to
increase their prices.
As of February 12, Dubai crude was placed at USD44 per barrel while MOPS for gasoline was pegged at USD59 per
barrel and diesel average prices was USD54 per barrel. Last Saturday, oil companies increased the price of diesel
by 25 centavos per liter; gasoline by 50 centavos per liter and E10 at 75 centavos per liter.
Prevailing pump prices of gasoline ranged from P29 to P35 per liter; diesel at P23 to P29 per liter and E10 at 29 to
P34 per liter.
Also, Reyes said they are open to the proposed revisiting of the oil deregulation law especially after the country
suffered supply shortage of the liquiefied petroleum gas (LPG).
"We have stated that we are open to the revisiting of the oil deregulation law whch is within the province of
Congress," Reyes said.
But Reyes admitted that the issue on deregulation and regulation of the oil industry is not the main issue here.
According to Reyes what they really need is more teeth in order to enforce the law.
"We are asking that DoE be granted authority to issue certificate of compliance as well as the cease and desist
order to those who will be found violating the law," the Energy chief declared.
"We are very weak in the enforcement," he further said noting that what they need are "addtional powers not
police powers" for them to do what the public want is expecting for them to do in order to protect the consumers.
(PNA)

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Workers say no to MRT, LRT fare hike

INQUIRER.net
First Posted 09:10:00 09/13/2010
Filed Under: Labor, Transport

MANILA, PhilippinesThe Trade Union Congress of the Philippines (TUCP) has urged the Aquino administration
to reconsider its plan to raise light trainfares, calling it "harsh and unfair to minimum wage earners and other
workers with fixed salaries."
"We consider the contemplated fare increasesunreasonable and unnecessary, in light of government's capability to
continue subsidizing commuters," said TUCP secretary-general and former Senator Ernesto Herrera in a news
release.
"Government should be helping employees cost-effectively get to work fast every day, not make it difficult for them
to do so," said Herrera, former chairman of the Senate committee on labor, employment, and human resources
development.
Herrera also pointed out that light train commuters "are the people who dutifully pay as taxes up to 25 percent of
their compensation income."
"They deserve their taxes back through safe, efficient, and affordable means of public transportation," he said.
Of the 4.2 million workers in Metro Manila, Herrera said 2.18 million are minimum wage earners, and many of them
take the trains to work every day.
The Department of Transportation and Communications (DoTC) previously bared plans to raise Metro Rail Transit
(MRT) and Light Rail Transit(LRT) fares starting October.
The DoTC indicated that it would increase the MRT fare by P25, and the LRT fare by P5 to P15. Based on the
current P15 fare for both trains, the implied new fares are P40 for the MRT, and P20 to P30 for the LRT.
"In the case of the P25 MRT fare increase, it would be just like taking back the recent P22 wage adjustment, plus a
lot more," Herrera said.
He was referring to the increase in the statutory minimum wage for workers in Metro Manila that took effect only
last July 1. The adjustment raised the daily floor wage by 5.8 percent, from P382 to P404.

Herrera said a worker now spending only P30 for a roundtrip MRT fare would have to spend an additional P50, or
a total of P80 roundtrip.

a fare hike would be acceptable if theres a corresponding salary increase.

Sabang, a native of Carmen town, said bus fares should go up only when prices of prime
commodities stabilize.

Signature campaign vs toll, train fare hike launched

By Abigail Kwok
INQUIRER.net
First Posted 14:30:00 01/11/2011
Filed Under: Transport, Consumer Issues

MANILA, Philippines An alliance of youth groups on Tuesday launched a signature campaign protesting the price
hikes in the expressways and both Light Rail Transit (LRT) and Metro Rail Transit (MRT), calling the increases
unjustifiable.
The group Strike the Hike Movement trooped to the LRT station in Recto Tuesday morning and slammed the Aquino
administrations public-private partnership (PPP) policy.
With the signature campaign, the group hopes to gather thousands of signatures nationwide to pressure the Aquino
government to take actions such as taking over the transport systems, scrapping the Value Added Tax, and others.
Where is the Daang Matuwid in the budget cuts on education and basic services? Where is Daang Matuwid in
looming tuition and miscellaneous fees and concurrent price increases of basic commodities? said Mark Louie
Aquino, one of the convenors of Strike the Hike Movement.
Malacaang had earlier approved increases in the LRT, MRT and both the South Luzon Expressway (SLEx) and the
North Luzon Expressway (NLEx).
Aside from this, taxi fare is also expected to increase, while jeepney operators are also calling for an increase in the
minimum fare of jeepneys.

Control over oil firms urged to curb fare hikes -lawmakers

INQUIRER.net
First Posted 15:15:00 05/08/2008
Filed Under: Economy, Business & Finance

MANILA, Philippines -- Lawmakers called on the need for government to exercise control over oil companies to curb
the unabated oil price hikes.
Quezon Rep. Lorenzo Tanada III, chairman of the House committee on human rights, and Quezon City
Representative Matias Defensor, chairman of the House justice committee, made the call on Thursday in the wake of
another demand for an increase in the minimum fare for public utility vehicles by some transport groups.
Tanada said the government should buy back the 40 percent share of Petron Corp. currently held by Saudi Aramco.
SEA Refinery Holdings, a company owned by the Ashmore Group PLC in London, had earlier offered to buy the
Aramco block.
"I came out as early as last month (that I am) against the sale to a foreign entity. Again, dapat ang ginawa ng ating
gobyerno, dapat tayo ang bumili uli ng shares ng Petron (What the government should have done is buy back the
shares of Petron). This will be the check-and-balance that we are looking for in the runaway prices of oil," he said in a
forum in Quezon City.
Tanada said government control over Petron, one of the biggest oil companies in the country, is needed to hold back
local oil prices because international oil prices are projected to rise up to $160 per barrel by the end of the year.
Defensor is also keen on government control of oil, citing the Philippine Constitution which gives the President power
to take over public utilities when public interest dictates.
Defensor said the unabated price hike of basic commodities during a global food crisis must be addressed
immediately.
Oil and energy companies, he said, should not close their doors to crude and energy exploration in the Philippines
because high oil prices in the global market will compensate for the high cost of oil exploration and extraction.
In the same forum, Alliance of Concerned Transport Operators president Efren de Luna said transport groups are
ready to stage a nationwide transport strike to intensify the call for a P1.50 fare hike in public utility jeepneys and
buses.
De Luna said the P1.50 increase in minimum fare is reasonable, explaining that the last fare hike was still in 2003
when oil product prices were P20 less than present prices. Contributed by Nicole Arce

Senator opposes MRT-LRT fare hike

INQUIRER.net
First Posted 12:38:00 01/16/2011
Filed Under: Transport, Politics, Consumer Issues

MANILA, PhilippinesSenator Juan Miguel "Migz" Zubiri will file a legal remedy to stop the impending fare hikes
for Metro Manilas mass rail transport systems MRT and LRT.
In a news release, Zubiri argued that commuters are already saddled with several price increases of basic
commodities and can no longer afford to pay additional transport expenses of about P480 a month should the

proposed MRT-LRT fare hikes are implemented.

"How are they going to pay for additional transportation expenses when their salaries are not even enough to pay
for food and other daily needs? We may have to file the necessary legal remedies to stop this.
If other groups would go to the Supreme Court, our office will study this, and we may join them in that fight to stop
the increase," Zubiri said further noting that the low-income and middle-income families will be mostly affected by
the proposed increase since they are the ones who are using the mass transport system.
According a Japanese aid agencys Mega Manila Public Transport Study in 2007 as reported by Newsbreak, 67.7
percent of LRT and MRT riders earned monthly incomes of less than P10,000.
"We are asking the government to stop the plan to increase fares. Since this is a government entity they should
look for other ways. Use good fiscal management and improve tax collection.
When it comes to public utilities and public transport system, the government should bite the bullet and at least
subsidize and assist the riding public because the masses, the low-income families, and the middle income families
who are its main users finding it hard to cope with their small salaries," he added.
Zubiri has filed a resolution calling for a Senate investigation to determine a more acceptable formula for the twin
fare increase. He also proposed that a gradual increase of 10 percent or about P1.50 every year for the period of
five years should be reasonable enough instead of a one-time, big-time hike.
The senator from Bukidnon is also seeking insurance benefits for LRT and MRT passengers.
"The MRT and LRT are the only public transport systems that do not have insurance for their passengers. If they
are going to increase their rates then they should at least pay for the insurance of their passengers in case of
accidents," Zubiri said.
The rallyists were made up of students from the University of the Philippines-Manila, Philippine Normal University,
St. Scholasticas College, De La Salle University, College of St. Benilde, Sta. Isabel College, Pamantasan ng
Lungsod ng Maynila, and Unibersidad de Manila.
Students have also created the Derail the Hike Alliance (Youth Movement against the rising tranport costs), in their
campaign to intensify their opposition to the fare hikes.
Secretary-General of the NUSP and one of the convenor of the Derail the Hike alliance, Vanessa Bolibol, said that
mass transit should remain accessible to all since it "is a public service offered by the government."

Bayan Muna party-list Rep. Neri Javier Colmenares said his group had no choice but to seek a court injunction as the
Aquino administration had already given its green light to the price adjustments not only for train rides but also for
taxis, buses and jeepneys.
The increases in transport fares will be a big burden on consumers as the government has been helpless in keeping
in check the rise in prices of food commodities while continuing to reject appeals for a wage hike, Colmenares said.
Valte reiterated the Aquino administrations line that the subsidy for something benefiting only Metro Manila
commuters must be reduced so a bigger number of Filipinos would benefit from increased social services.

She said the fare increases were also expected to result in better services on the trains.
We would like to appeal to the stakeholders to hear us out on where this fare increase is coming from. In the end, it
aims to provide better service, Valte said.
She said many people were subsidizing the rail systems but were not benefiting from the service.