Press Release
July 9, 2008


Senator Mar Roxas challenged the President's economic team to come up with a better thought-out and defensible position on his proposal to suspend the 12% value added tax (VAT) on oil products in light of conflicting statements issued separately by the Department of Finance (DoF) and the National Economic Development Authority (NEDA).

"Given the extraordinary circumstances, the status quo is clearly unacceptable. I am advocating change to ease the pain of the people. How far is the government willing to go to achieve the same purpose?" he said.

Roxas, author of Senate Bill No. 1962 seeking a six-month suspension of the VAT on oil, noted that while NEDA acting Director-General Augusto Santos said the government is open to a lowering of VAT on oil, Finance Secretary Margarito Teves said that such a move would only benefit the rich. Presidential Economic Adviser and Albay Governor Jose Salceda offered a different view: a "capped" or limited VAT for petroleum products.

"At last, we hear from the economic managers and not public relations people about the oil VAT on the part of the administration. But is NEDA speaking in behalf of the President's economic team or are the different agency heads merely ventilating their respective views through the media? The President's economic team should show that they have taken this highly important issue seriously and speak with one voice," he said, adding that the people deserve clear signals from an administration that continues to reap benefits from soaring oil prices.

"Ang sabi ng NEDA, okey lang na ibaba ang oil VAT. Ang sabi naman ng DoF, teka, mayayaman lang makikinabang niyan. Samantala, lahat tayo tulala, tuliro, at humaharap sa matinding tag-gutom dahil sa matataas na presyo ng langis at pagkain," (NEDA says lowering the oil VAT is okay. DoF says hold on, only the rich will benefit. Meanwhile, the people are dazed, confused and confronted with acute hunger due to the high costs of oil and food)," he said.

The Senator said he is ready to debate with those in the administration and around the President who advocate inaction and acceptance of the pain of the oil crisis versus a comprehensive review of economic policies and the 2008 budget.

"The people have the right to know that there are weapons for poverty alleviation that are languishing in the government's arsenal. I reject the notion that our government is helpless in confronting this oil crisis. The 2008 budget can be reviewed and converted into the people's battle plan versus soaring prices and an acute food shortage," Roxas stressed. In reviewing the budget, Roxas said that the government should consider the following:

  • Prioritize food security. Spearhead an agriculture "renaissance" by prioritizing farmer support through seeds, fertilizers and credit, and by rehabilitating irrigation systems;
  • Accelerate maintenance spending, specifically those that have a high labor component. This includes maintenance and rehabilitation of classrooms and irrigation systems. To date, the government is still under-spending, so it can release more money this way;
  • Suspend big-ticket capital expenditures, where a large chunk of the funds spent would only go to "right-of-way" purchases that do not create jobs and do not filter back to the economy (and instead, go to foreign bank accounts or luxury cars of land owners);
  • Suspend the usual spending of the Road Users' Tax, as well as spending for "foreign trips" and other unproductive spending. Realign funds to food-for-work or food-for-school programs, or to conditional cash transfer programs for dislocated workers;

The government could also revert back to the four-day workweek, except frontline, health and security services. Free shuttle services could also be considered as a non-wage benefit.

The Liberal Party President stressed that if the administration is really serious about lowering the VAT on oil, no less than the President should signal to the majority bloc in the House of Representatives a willingness to open the oil VAT issue for public debate and consultations.

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