MANILA, JUNE 6, 2008
(STAR) By Paolo Romero - Malacañang assured the poor yesterday of more direct cash aid and other forms of assistance from the P14-billion government revenue from value-added tax (VAT) on oil and power.

In separate interviews, Executive Secretary Eduardo Ermita and Budget Secretary Rolando Andaya Jr. said the Presidential Task Force on Energy Contingency is reviewing numerous proposals on ways to immediately and effectively use the VAT proceeds to enable impoverished households to cope with rising fuel and food prices.

“President Arroyo thought that we should immediately implement things that are doable, so there is the P4 billion from the VAT on oil from the first quarter,” Ermita said.

“We’re not just thinking of welfare of people now, we are also thinking of their welfare in the long run,” Andaya said. “We want to return immediately to the people what was collected.”

Ermita said Mrs. Arroyo has launched a P4-billion assistance program for the poor in the last few days.

“What she and the Cabinet are preoccupied with is what the government can immediately do to alleviate the effects of rising oil and food prices,” he said.

Mrs. Arroyo is set to launch today at the Eulogio Amang Rodriguez Institute of Science and Technology in Manila the P500-million “New Students’ Assistance Fund for Education for a Strong Republic” program with funds from VAT proceeds in the first quarter of the year.

Andaya said the educational assistance was on top of another P500 million allocated for student loans in state universities and colleges, and private schools.

The task force headed by Ermita will fast-track its review of the various proposals on how to use the P14 billion expected from VAT this year, he added.

Ermita said the task force will meet again on Monday, this time to discuss the matter with members of academe.

Another P1 billion has been set aside to fund the conversion of public utility vehicles running on diesel and gasoline to liquefied petroleum gas or compressed natural gas, he added.

On Tuesday, Mrs. Arroyo launched the P2-billion one-time subsidy that would benefit some four million poor households that would get P500 each to pay for their electricity bills for the month.

Mrs. Arroyo has vowed to plow back proceeds from VAT on oil and power to the poor as government revenues increased due to rising prices of crude in the world market.

“The high price of oil is a global issue outside the control of the government,” she said. “We have nevertheless taken and will continue to take actions to reduce the pain on our people of these high prices.”

Fuel subsidy

Public utility vehicles will be given a P3-billion fuel subsidy every quarter, the government said yesterday.

Finance Undersecretary Gil Beltran said the subsidy will come from the expected P18.6-billion VAT on oil this year.

The subsidy may be in the form of a P2-per-liter discount for public utility vehicles although its implementing guidelines are still being drawn up, he added.

Beltran said an interagency group comprised of the National Economic and Development Authority (NEDA), Department of Budget and Management (DBM) and the Department of Finance, has already endorsed the plan to Malacañang.

“It can be accommodated by the increase in collections,” he said.

Computations by the Department of Finance showed that every one-percentage-point increase or decrease in inflation translates to an increase or decrease in revenues of P10.6 billion.

Inflation already rose 8.3 percent in April, above the official forecast of 7 percent and the previous month’s inflation of 6.4 percent.

The Finance department is in favor of granting a subsidy to the various sectors using revenue from the VAT on oil instead of scrapping the tax.

Finance department estimates that the government will lose P45.7 billion in direct revenue yearly if VAT on oil is suspended.

“Our studies based on the Family Income and Expenditures Survey of 2003 show that 40.7 percent of the benefits (P18.6 billion) from suspension of VAT on oil will accrue to income groups earning P250,000 and above. Another 41.3 percent (P18.9 billion) will accrue to income groups earning P100,000 to P249,999,” the DOF said. — With Iris Gonzales

Chief News Editor: Sol Jose Vanzi

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