CLARK, Pampanga -- The government is more inclined to increase its subsidy of the operations of jeepney and tricycle drivers than to remove the 12-percent value-added tax on oil.
At the three-day seminar of the Economic Journalists Association of the Philippines (Ejap), Department of Budget and Management (DBM) Secretary Florencio “Butch” Abad said lifting the VAT on oil is ill-advised since this would only benefit a few.
“It’s better to expand the Pantawid Pasada Program than remove the VAT on oil… because the subsidy goes directly to those who really need it,” said Abad.
He said that the government is now evaluating the feasibility of increasing the budget for the program which effectively subsidizes the fuel costs of jeepney and tricycle dirvers.
Abad said the government has already released another P450 million for this, and that the government is willing to release more “if it is necessary.”
“We have the capacity to extend it, if it becomes necessary,” he said.
“It's actually appropriated from Malampaya, so that gives us additional appropriation on top of the budget. Because if it is related to fuel, normally Malampaya is conveniently available, saka hindi naman namin ginagalaw [yung funds] masyado eh (we do not use the funds that much),” he further explained.
The government provides subsidy to jeepney and tricycle drivers to help them cope with spikes in fuel prices through Executive Order 32, or the Pantawid Pasada Program, issued last year.
Jeepneys and tricycles are popular modes of transportation in the Philippines. Any increases in fuel costs could jack up fares and affect the price of goods.
This year, a total of 214,596 jeepney and tricycle drivers nationwide will be givenso-called smart cards pre-loaded with P1,050, which is equivalent to fuel assistance of P35 a day for one whole month.Abad also reminded drivers who have received smart cards during the first batch to consume the entire amount on the card as the card is set to expire next year.
Prices of oil are already nearing P60 per liter after petroleum companies increased prices for the ninth time since January 2012.
Oil is becoming more expensive due to the increasing demand from Europe as well as the continuing tension between Iran and other nations, Abad noted.
Earlier, Iran has threatened to cut off its oil supply to six European countries in retaliation to the embargo imposed by the United States and its allies to pressure Iran into abandoning its nuclear program.
Abad said these developments are beyond the government’s control and the only way to mitigate the problem is to give subsidies to people who are most affected by it.
