But Malacañang thinks otherwise, defending the government’s position to continue imposing VAT on oil products amid the skyrocketing fuel prices in the world market.
Deputy presidential spokesperson Abigail Valte said VAT on oil is being used by the Aquino administration for its poverty alleviation programs. “The revenue from VAT funds social programs aimed at poverty alleviation,” she said.
But Binay said a comprehensive study of proposals to reduce the 12 percent VAT on petroleum products should be part of government’s efforts to mitigate the effects of escalating oil prices on consumers.
He cited in particular the recent proposal of former Budget Secretary Benjamin Diokno, who said that VAT may be reduced or increased depending on the international crude oil prices.
“We owe it to the people to study the proposals to reduce the VAT on oil products, taking into consideration the effect of such a move on the consumers and revenues,” he said.
In his proposal, Diokno said the government may reduce the VAT to 10 percent when international crude oil prices reach $120 per barrel. Conversely, it may increase the tax up to 15 percent when the prices reach US$80 per barrel.
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