Roxas: No need for econ stimulus plan, just suspend VAT on oil

Senator Mar Roxas today said there is no compelling need for Congress to consider any economic stimulus plan, as the proposed six-month suspension of the value-added tax (VAT) on oil would be enough to enliven consumer spending and invigorate the economy.

"This is the fair and compassionate approach: for Congress to temporarily lift the VAT on oil in view of abnormally high oil prices that have caused economic difficulties to ordinary Filipinos," Roxas said.

"People are reeling from unusually high fuel prices—from the small fisherman who needs gas for his motorized boat, to the farmer who needs fuel to run the pumps irrigating his farm, to the average household that is now paying three times for a tank of LPG," Roxas lamented.

According to the Department of Energy (DOE), the suspension of the VAT on oil, as proposed by Roxas, would effectively reduce pump prices by about P4 to P5 per liter, and in the case of LPG, by about P65 per tank.

A number of advisers to Malacañang have proposed an economic stimulus plan that would cost the government an extra P75 billion, to be contained in a supplemental budget, supposedly to cushion the economy from the potential unfavorable impact of an economic downturn in the United States, the Philippines' largest export market and biggest source of foreign direct investments.

Roxas, chairman of the Senate committee on trade and commerce, said his proposal to suspend the VAT on oil, as put forth in Senate Bill 1962, would cost the government only P30 billion in a year, or P15 billion for six months. This is according to the testimony of the Department of Finance in a recent committee hearing on the said bill.

"Our proposal simply means allowing the people to keep an extra P15 billion in their pockets over the next six months: money that otherwise would have gone to the Bureau of Internal Revenue. Or worse, to leakages and corruption,” he said.

“The people can then spend the P15 billion to cover other forms of personal consumption. And this will have the effect of stimulating the economy, " Roxas concluded.