MANILA, JULY 14, 2008 (STAR) By Iris Gonzales - The Department of Finance (DOF) is studying a proposal that seeks to replace the value-added tax (VAT) on oil with a specific tax, officials said.

The DOF is particularly weighing the revenue impact of the proposed specific tax on oil under House Bill 4268 filed by Rep. Exequiel Javier, chairman of the House ways and means committee.

According to Javier’s proposal, the specific tax on oil will be based on the volume of oil. As such, the tax will be fixed despite increases in the price of oil.

Under the proposed measure, the price of oil by which the tax will be based will be fixed at $103.50 per barrel.

With this cap, the amount of value-added tax on oil is converted to specific tax. This means that any increase in the price of oil beyond $103 per barrel will no longer be taxed.

“Moreover, the specific tax rates will be structured to serve the socialized taxation of petroleum products in such a manner that gasoline, which is consumed by motorists, carries the heavier burden of the tax while diesel, which is used for transport, kerosene, which is used in the rural areas, and liquefied petroleum gas, which is used for cooking, bear the lighter burden of the tax,” Javier said in his proposal.

Finance officials said the department is looking into the merits of the proposal to assess whether this could indeed replace the VAT on oil as demanded by lawmakers, cause-oriented groups and most recently, the Catholic Bishops’ Conference of the Philippines.

For now, the Department of Finance (DOF) remains adamant that lifting the sales tax on oil would largely benefit the rich which are the biggest consumers of petroleum products.

The DOF added that most of the consumption of poor families are VAT-exempt such as agricultural food products.

Fiscal authorities prefer to retain the VAT on oil, saying that removing it could leave a huge dent on state coffers.

The DOF expects additional revenue of P18.6 billion from VAT this year which would be used for social services.

Selective VAT removal

While pro-administration Sen. Juan Miguel Zubiri is pushing for the removal of the 12 percent VAT on fuel, he stressed that it should only cover the public transport and trucking sectors, particularly on diesel which he expects to increase between P80 to P90 per liter due to the rising prices of crude in the world market.

“We should limit the VAT removal on diesel on transport and trucking sectors,” Zubiri said.

The senator said this move will help cushion the impact of rising prices of basic goods due to high cost of transportation.

He urged the Arroyo administration to rethink its position against the calls to scrap or suspend the VAT on oil.

He added that although he recognizes the government’s position that the suspension of VAT on oil would derail the delivery of basic services, it should also go beyond short-term solutions such as providing subsidies.

Zubiri, author of the Biofuels Law, said he and concerned representatives from the energy sector met with President Arroyo last Tuesday to talk about plans to speed up government programs aimed at developing biofuels such as ethanol and jathropa, which could be used as a long term solution to the oil and energy crisis.

He said the government is hoping to be able to set up ethanol plants in Negros Occidental and Ormoc by 2009, producing an estimated 70-million liters of ethanol for local use.

Zubiri again allayed fears that the production of sugar ethanol will create problems on the country’s sugar production and food security.

He said the law disallows the use of irrigated lands for ethanol and jathropa production.

Zubiri expressed optimism that the Senate will be able to pass the law on alternative energy once Congress resumes session on July 28. – With Christina Mendez

‘GMA may recall ERC chief’s appointment’ By Paolo Romero Monday, July 14, 2008

President Arroyo may recall the appointment of Energy Regulatory Commission (ERC) Chairman Zenaida Ducut if serious allegations against her are found to be true, officials said yesterday.

Offhand, however, Executive Secretary Eduardo Ermita and Press Secretary Jesus Dureza dismissed criticisms of Ducut’s appointment and defended Mrs. Arroyo’s prerogative to pick officials of her choice.

Ermita said Ducut, a former two-term lawmaker and lawyer from Pampanga, was qualified for the post and detractors are expected to pounce on the issue of her appointment to the ERC.

“The President is very discerning in her appointments and she chooses very well,” Ermita said in a telephone interview.

“She also is receptive to suggestions and criticisms so if these allegations are proven, she may reconsider her move,” Ermita said. “But these criticisms are expected (and) they must (be) proven also.”

STAR columnist Federico Pascual, in his article yesterday, asked whether Ducut was related to Leslie Ducut and Ressie Ducut, both from Pampanga, who were among the incorporators of a firm that was awarded by the National Power Corp. (Napocor) a P956-million contract to supply coal for some of its plants.

The deal, he said, raised eyebrows because the firm, Transpacific Consolidated Resources Inc., reportedly only had P62,500 in paid-up capital but was “gifted” by Napocor with a coal supply contract worth nearly P1 billion.

“We always find some redeeming value to criticisms however sweeping and unfair they may be,” Dureza said on negative comments against Ducut and recent appointments of Mrs. Arroyo.

He said the President, by reason of her office, “does not need anyone or an additional office for that matter for the purpose of protecting herself or promoting personal interests as some critical sectors merrily claim.”

He said the residual powers of the presidency are so vast in reach and depth that no additional office or person can further enhance it.

“”Moreover, it should not surprise anyone that persons who are close or perceived to be close to the President are appointed,” Dureza said. “The President merely ensures that the team she has to work with are those whom she thinks she can perform and can approximate her rigorous demands of performance and diligence.”

“After all, the President, as appointing authority, takes responsibility and either benefits or suffers from the appointees’ performance or lack of it,” he said.

He said the bottom line is the President’s trust and confidence in officials she appoints.

He said the views of critics are valuable as they are “cautionary in nature and constant reminders that public office, whomsoever it is bestowed is endowed with public interest, closeness to the appointing authority notwithstanding.”

Chief News Editor: Sol Jose Vanzi

All rights reserved