Govt studying removal of VAT on oil, power

MANILA, Philippines - The economic team of President Arroyo led by the Department of Finance is looking to the possible impact of the removal of the expanded value added tax on oil and electricity, Executive Secretary Eduardo Ermita said Wednesday. However, he cautioned against premature jubilation saying that in case the scraping or the reduction of the EVAT is recommended and approved, it would still have to undergo legislation as the “EVAT is a law." Ermita said the study is being conducted by the DOF in consultation with the departments of Budget, Trade and the National Economic and Development Authority (NEDA). The group, he said, will also study the impact of the possible reduction or removable of the royalties that the government imposed on the Malampaya Natural Gas operations. He, however, was quick to deny that the study meant a softening of the Palace which had repeatedly rejected proposals to reduce or remove the EVAT and the royalties which is blamed by several sectors for the rising costs of oil products and electricity. Presidential Economic adviser and Albay Gov. Jose Salceda, in a text message, said of the reformed VAT imposed on electricity, the government generates about P4.2 billion yearly. Ermita said he would ask Finance Secretary Margarito Teves for an update on their study which includes different scenarios like the possible impact on the on going and future projects and the country’s revenue if the EVAT or even the royalties on natural gas is suspended, reduced or removed. “The burden that brought about by the increase of power as well as the rate electricity is a major concern but then it is also the duty of government, and I might say the national leadership, to balance the action it has to take… And so its not easy to say that because of a crisis, among the things that we want to do is cut VAT on some of the activities such as the VAT on oil, or VAT on other fuel," he said.- GMANews.TV