Manila: Oil industry representatives on Thursday backed the proposed suspension of value-added tax (VAT) on petroleum products, saying it could lead to faster and more direct reductions in pump prices.

According to Philippines News Agency, during the second Senate Proactive Response and Oversight for Timely and Effective Crisis Strategy (PROTECT) hearing, Tanya Samillano, representing small oil players, emphasized that removing VAT at the point of importation would immediately lower costs, allowing fuel price cuts to be passed on more efficiently to consumers. Samillano stated, "Mas madali siyang i-implement. kung tatanggalin sa point of importation. it will reduce your cost (It is easier to implement if removed at the point of importation. it will reduce your cost)."

She further added that eliminating VAT at the source ensures it is no longer included in the pricing structure, resulting in more immediate price adjustments at the pump. "Kung wala 'yung VAT input. hindi na siya kasama sa cost. mararamdaman ng consumer (If there is no VAT input. it is no longer part of the cost. consumers will feel it)," she explained.

Lorelie Quiambao-Osial, president of Shell Pilipinas Corp., supported the proposal, highlighting that VAT, being a percentage-based tax, increases as global oil prices rise. Quiambao-Osial noted, "From a technical point of view, the VAT would be faster to implement. and because it is a percentage, the higher the price, the higher the VAT becomes."

Similarly, Lubin Nepomuceno, General Manager of Petron Corp., stated that the industry shares the same position supporting VAT suspension. The support comes as lawmakers study more measures to cushion the impact of rising global oil prices, alongside the newly enacted law allowing the suspension of fuel excise tax.

Senator Bam Aquino mentioned that VAT suspension is being considered as a complementary measure to further reduce fuel costs, particularly as global supply disruptions continue to drive up prices. The proposal is expected to be taken up in future deliberations as part of a broader set of interventions to mitigate the effects of the oil crisis on consumers and key sectors.