Manila: Senator Imee Marcos is advocating for President Ferdinand R. Marcos Jr. to be granted the power to temporarily suspend the value-added tax (VAT) on petroleum products. This measure aims to alleviate the impact of rising oil prices on motorists and key sectors.
According to Philippines News Agency, Marcos introduced Senate Bill No. 120, which is a refiled version of her previous proposal. The bill seeks to amend the National Internal Revenue Code, allowing the President to lower or suspend the 12 percent VAT on petroleum products for up to one year during a declared national emergency or state of calamity.
Marcos stated that foreseeing the crisis as early as 2022 motivated her to file the bill to enable the President to halt the VAT imposition temporarily. The bill stipulates that the President may issue an executive order, in consultation with the Finance Secretary, to reduce or suspend VAT on the sale and importation of petroleum products to ease consumers' financial burden during crises.
The senator emphasized that suspending VAT would directly benefit consumers, as this tax is added to pump prices. She noted that the current prices for diesel and gasoline are expected to rise, and the VAT suspension could lead to significant savings per liter for both fuels.
Marcos clarified that the proposed tax relief would specifically target sectors severely impacted by rising fuel prices, including drivers, operators, farmers, fisherfolk, and other small fuel consumers. She also urged the Department of Finance to consider reducing VAT for these small sectors to prevent large corporations from reaping most of the benefits.
Meanwhile, Senator Sherwin Gatchalian expressed concerns about the potential impact on government spending. He emphasized that any reduction in excise tax on petroleum products should not compromise funding for social services, education, and health programs. The Department of Finance estimates that the proposed suspension could lead to approximately PHP136 billion in lost revenue if implemented from May to December this year.
Gatchalian urged the Department of Budget and Management to identify areas where government spending could be reduced to offset potential revenue losses. He suggested measures such as minimizing government personnel travel and reducing fuel and electricity consumption through a four-day work week for some government agencies.
