THE House committee on ways and means yesterday said government will lose at least P62.5 billion a year if it suspends the 12 percent value added tax on petroleum as part of efforts to cushion the impact of the rising prices of rice and other basic commodities.

Rep. Exequiel Javier (Lakas, Antique), committee chair, said VAT suspension on oil products could result in an "unmanageable" budget deficit.

"If VAT on oil will be suspended, there could be rapid peso deterioration and our public deficit would become very high again," he said.

Oversight committee chair Rep. Danilo Suarez (LP, Quezon) said a country with a high deficit would certainly get a credit downgrade, "which could cost us billions of pesos in additional debt servicing and loss of investor confidence."

Suarez said the plan to achieve a balanced budget will also be affected considering that the internal revenue target collection is only P845 billion and P255 billion for the customs.

Suarez said suspending the VAT on petroleum "is likely to hurt the poor who benefit from social programs funded by VAT."

A six-month suspension of the VAT on oil is being pushed by Sen. Mar Roxas.

But government economic managers disagreed with Roxas’ proposal which is contained in Senate Bill 1962, on the ground it would wreak havoc on government’s goal of a balanced budget.

Roxas said urged government to agree to the suspension on a single commodity which is oil.