peaker Prospero
Nograles has come up with a bright idea. Instead of scrapping the value added
tax on oil, he wants to go back to the specific tax regime. It’s a workable
compromise, especially with Nograles’ added refinement that the tax break be
worded as a cap while retaining the ad valorem character of the charges
consistent with the general added value tax set-up.
Nograles’ proposed cap is P7 per liter of gasoline and other
oil products. At the 12 percent VAT rate, the cap is based on a pump price of
P58. And there lies the trouble. Nograles, in effect, is saying that the
government should keep its current take and forego only the potential additional
revenues from future oil price increases.
No relief now, only the promise of no additional burden if
crude prices continue soaring. From where we sit, that’s plain deception.
If the idea is to prevent the government from piggybacking on
the runaway prices of oil, why don’t we go back to the time when the VAT was
expanded to include oil? Gasoline then was selling for P35 a liter, yielding for
the government P4.20. That tax take has since practically doubled. And that same
increase in government’s share has taken place in all transactions, although at
rates proportionate to the actual rise in prices of different commodities.
Arroyo administration apologists want us to believe that the
economy will implode if the VAT system is eased to give relief to consumers.
They are practically admitting the administration would have gone bankrupt had
global circumstances not pushed crude oil to $145 a barrel, triggering price
increases in all commodities down the line.
This administration, like a hard-core drug user, has become
addicted to runaway inflation, enjoying a high from windfall tax collections at
the price of the destitution of the people.
Another deceptive line of this administration is that its
windfall tax collection is being used to help the poor in the form of direct
cash transfers and subsidies.
What are the actual figures? Gloria Arroyo’s "Katas ng VAT"
doles are said to total P4 billion. What, on other hand, is the amount of
additional taxes arising from inflation. The figure of the Department of Finance
is P10.5 billion for every 1 percentage point increased in inflation. At the 5
percentage point difference between a 4 percent inflation expected at the start
of the year and the likely 9 percent inflation for the full year, the additional
collections will amount to P52 billion.
So where will the P48 billion (P52 billion in windfall against P4 billion in
"Katas ng VAT) go? Most likely to fund overpriced and graft-ridden projects,
which is the story of the nation’s life the last seven years under Gloria.
