Social plan includes P5-b fresh subsidy
Manila Standard
The government will spend at least P5 billion in fresh subsidies and social welfare projects using collections from the value-added tax to cushion the impact of spiraling prices on the poor.
That is one of the reasons Malacañang will not heed proposals to suspend or reduce the VAT on oil products, officials said.
The Catholic Bishops Conference of the Philippines earlier urged the government to scrap the VAT on oil products, since the tax was causing a price spiral.
Finance Undersecretary Gil Beltran said reducing the oil VAT rate would not only impair the government’s capacity to finance social services but also benefit only the rich who comprise 95 percent of oil consumers.
“It is a very difficult thing to do. There are some policy problems with lowering rates when you already have amounts for certain projects,” Beltran said.
“It is better from an economic point of view to keep the excess revenues and support the poor because this [VAT] is being paid for by the rich,” the Finance official said.
The government expects to collect around P73 billion from the VAT on oil this year, of which P18.6 billion would be in “excess revenues” due to the increase in oil prices in the global market from a low of $60 to a high of $146 within the first semester.
Beltran said the government has collected around P9 billion in excess revenues from the VAT on oil for the first half of the year, of which P4 billion was already spent last month on various social welfare projects.
Budget Secretary Rolando Andaya Jr. said once the department submits its certification of collection, the P5 billion in excess revenues for the second quarter would be used for health subsidies and improving primary and secondary hospitals and for the restoration and rehabilitation efforts on the areas ravaged by typhoon Frank.
The first round of subsidies the Arroyo administration implemented last month covered P2 billion in power bill reduction; P1 billion in scholarships and student loans; and another P1 billion in the conversion of gasoline-fired public utility vehicles run on natural gas.
Joyce Pangco Pañares
