Thursday, October 07, 2004

NR1005b:No to VAT on transport industry, petroleum

Mula sa Tanggapan ni Anakpawis Rep. Crispin B. Beltran
News Release October 5, 2004
House of Representatives, South Wing Rm 602
931-6615 Ina Alleco R. Silverio, chief of staff
Celphone number 09213907362


Anakpawis Representative Crispin Beltran today expressed opposition to the
proposal of the national government through the Department of Finance to impose
the value-added tax system on the public-transport industry, including jeepney
and bus operators.

Finance Undersecretary Grace Tan has recently divulged that the DOF wants to put
public transport under the VAT system and replace the current percentage tax
which allows operators to include the VAT on petroleum as part of their
expenses that are deductible from their taxable income.

The DOF has already pushed for the imposition of a 10% VAT on petroleum as an
added measure to help the cash-strapped administration deal with the fiscal
crisis. Putting VAT on petroleum has automatically meant that operating costs
of products will also increase. Government has tried to pacify businesses and
transport operators by allowing them to partly recover from the added expense
by taking advantage of the tax system's input-output mechanism. Under this
scheme, businesses are allowed to declare as input credits the amount of VAT
they pay for materials necessary for the business operation. The input credits
can be deducted from the amount of VAT the businesses pay, or passed on to

"In whichever case, it will still be consumers who will be shouldering higher
taxes, increased prices for services and commodities. Putting VAT on petroleum
and on the transport industry are both nightmare proposals for the public
already weighed down by high prices and low purchasing power. These are moves
that should be opposed to the last," he said.

Beltran said that it was an outrage that the government is burdening the public
transport industry with higher taxes when it continues to provide billions in
tax exemption privileges for foreign multinational and transnational
corporations in the country.

Beltran said that millions of revenues are being lost from the fiscal incentives
- outright tax exemptions, income tax holidays, tax credits and reduced taxes
for firms and industries. The national government itself says that all these
incentives are worth at least P741B in the last five years, and P175B for the
year 2003 alone. The biggest beneficiaries of these exemptions are the tax and
duty exemptions (P152B) and income tax holidays (P5B) granted to export
processing zones.

"There is no need to impose VAT or any other kind of new tax on industries
directly and immediately used by consumers such as public transport; and
petroleum prices are already excessive enough. The P1.50 hike in transport
fares has not been sufficient to cover the increases in oil prices in the last
year alone, and drivers and operators are still angling for higher fares which,
in turn, means more problems for the public transport-riding public. Instead of
taxing public transport, the government should slash the incentives it showers
so generously on foreign corporations who, in turn, suck the economy dry by
killing local businesses and manipulate product prices at whim to ensure their
superprofit-returns," he said. #


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