Press Release
January 15, 2008


Senator Mar Roxas said he will continue to stand by his proposal to "suspend" the value-added tax on oil and petroleum products, saying it is a fair and urgent step to address the present economic situation.

Addressing reporters of the Foreign Correspondents' Association of the Philippines (FOCAP) yesterday, Roxas said while the government must be aware of the "economic orthodoxy," it must nonetheless adopt its policies to the changing times.

"I believe that the time has come for a fair and urgent step to give our people a break from high oil prices during these extraordinary times. As the citizenry tightens its belt, is it not only appropriate for the government to tighten its belt in turn?" he said.

"The executive branch was quick to reject this proposal. Which is not at all surprising; how can they accept it, when the government has chosen to rely on oil revenue collections, an easy get, rather than closing the loopholes and performing more effectively by running after bigtime tax evaders and smugglers?," he stressed.

The Senate Trade Committee Chairman said the situation when the 12% VAT was slapped on petroleum products—when oil was only at $30 a barrel and the government deficit was in excess of P250 billion a year—has now "remarkably reversed."

With oil prices skyrocketing to $100 a barrel, he said it is imperative to put money back in people's pockets by suspending the EVAT on oil, which the government could now afford because the budget is at near-balance. Furthermore, he said the government should allow the recirculating of these foregone VAT proceeds on oil, as consumer spending will be collected again by the government.

"This is a reasonable and compassionate approach in light of contemporary economic conditions. The unprecedented global rise in energy prices is driving both the rethinking and practical modification of economic policy around the world. Why should we be any different?" he said, citing the case of China and Thailand.

"Sticking to old formulae when the situation has changed is like sticking to the old antibiotic when the germ and infection has mutated into something else. We know the rules, we know what the orthodoxy is, but we must also respond to the challenges of the times," he said.

Roxas stressed that the proposal to suspend VAT on oil is not an end in itself, as it is part of his two-fold approach to address proverty: first, relief, and then second, a massive and focused investment in our people through education and health.

"As for the massive, focused investment in our people, I have also filed a bill stipulating that a People's Fund be created out of all EVAT revenues; this is so we can fully fund and thus solve our education and health crises. We cannot allow the masses of Filipinos to continue passing down to their children only an inheritance of poverty," he said.

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