Govt sees P70-B VAT windfall amid rising oil prices

The Department of Finance has estimated a windfall of up to P70-billion from the 12-percent value-added tax (VAT) on oil for 2011 amid rising oil prices in the world market. The government had initially seen VAT earnings from oil at P52 billion, but revised this projection after the turmoil in North Africa and the Middle East pulled up commodity prices. The government based its initial projection on oil at of $80 per barrel, but revised its forecast based on $110 per barrel. Finance Undersecretary Gil Beltran reported that in the first two months of the year alone, the VAT windfall from oil reached P1.2 billion. Beltran broke down the figure as P500 million in January and P700 million in February. The Finance Department has meanwhile made the assurance that revenues from VAT on oil would be used to support the budget and to cushion the impact of higher oil prices. The agency also said the government will use part of the proceeds for the Aquino administration’s initial P450-million fuel subsidy program for the transport sector. s In March, Senator Ralph Recto called on the government to slash the VAT on oil products as VAT revenues go up with rising oil prices. Earlier this month, however, the President thumbed down proposals to lower the tax as the move will bring government revenues down without benefiting the public. Activist groups on Wednesday called for the removal of VAT on oil to help the public cope with the consequentially rising prices of basic commodities, according to GMA newscast Saksi.
For the latest Philippine news stories and videos, visit GMANews.TV The government generated P45 billion last year from the VAT. — With Paterno Esmaquel II/GMA News