As prices of oil products increased for the 18th time this year and added to the burden caused by the soaring prices of basic commodities, Gabriela Women’s Party Rep. Luzviminda C. Ilagan said it’s high time to remove the 12-percent value added tax (VAT) on oil.

“The 12-percent VAT on oil should be immediately removed to ease the burden of Filipino consumers who can hardly keep up with the soaring prices of oil products and other basic necessities. Studies show that doing so will cause prices of diesel to go down by P6.53 per liter, gasoline by P7.26, and LPG by P87 per 11-kg tank,” the progressive solon from Mindanao said.

Ilagan refuted President Gloria Macapagal-Arroyo’s earlier claim that removing the VAT on oil would “lead to huge budget deficits and deprive government of money to spend for social services and infrastructure.

“The Department of Finance said in the news that the government stands to generate an additional P31.5 billion to P52.5 billion in taxes this year, while the Bureau of Internal Revenue expects to collect P18 billion from oil taxes. If the government decides, therefore, to remove the VAT on oil, it can still save between 13.5 and 34.5 billion for its projects,” she said.

She added that the oil subsidy the government grants – cash transfers, loans and scholarships – is not enough. Aside from removing the VAT, Ilagan said that the government should repeal the Oil Deregulation Law.

“Prices of petroleum products have increased 535% since the Oil Deregulation Law was implemented in 1995. Instead of helping Filipino consumers, the liberalization of oil industry only pushed many Filipinos further into poverty because of the almost weekly increase in the prices of oil products, which in turn affects the prices of other commodities. The government should have control over the oil industry which today is monopolized by only a handful of big companies,” Ilagan said.


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