Press Release
July 10, 2008


Senator Mar Roxas said the government must not deceive the public into thinking that the value-added tax (VAT) on oil is the only means to fund its pro-poor programs and subsidies to help the poor during this time of record-high inflation.

"Are we relying solely on VAT on oil to implement these pro-poor programs, at the same time, to cut the deficit? Are they telling us that this VAT on oil is the be-all, end-all of our collection system?" he asked the government.

The Liberal Party President said the government has other means to source funding for its pro-poor programs, such as making collections of other taxes more efficient and reviewing its spending program, re-channeling funds from items that are "usually there but actually useless to the people," to programs aimed towards immediate relief and ensuring food security.

"Pinalalabas na nakasalalay sa VAT sa langis ang silbi ng gobyerno, na kapag nawala ito ay wala na silang magagawa. Samantala, hindi pa naman nalulubos ang iba pang paraan para magkaroon ng dagdag na pondo ang gobyerno para sa mga programa nito (They make it appear that the government's efficacy depends on oil VAT, and that they're practically helpless without it. At the same time, other means to ensure funds for government programs have not been maximized)," he added.

The Chairman of the Senate Committee on Trade and Commerce recalled that imposing VAT on oil products was not originally part of the government's plan to save itself from a fiscal crisis. When oil was finally subjected to VAT, Dubai crude was just $30/bbl, far from today's $140-level.

Now that food and oil prices--and consequently, the inflation rate--have reached record-highs, "the government should not continue to be dependent on a socially sensitive product for its revenues. It's riding on the people's suffering, it's making the poor pay for the government's inefficiencies," Roxas said..

"I reject that the government is helpless. I reject that the government cannot do anything else aside from what's business-as-usual. The times call for the government to tighten its own belt, not continue tightening the noose on an already choking economy," Roxas said.

He said that in reviewing the budget, the government should seriously consider several things:

  • Suspending big-ticket capital expenditures (new construction) because these have relatively higher leakages, longer gestation periods due to tedious bidding processes, and lower employment generation. "It's better to accelerate maintenance or rehabilitation of existing projects because these are labor-intensive, so we're sure the money goes to workers, not to foreign consultants."
  • On accelerating maintenance or rehabilitation spending, focusing could be on repairing and rehabilitating existing irrigation systems to improve farm productivity. For land areas which don't have existing irrigation systems, small water impounding systems should be preferred over big-ticket irrigation projects which could take too long and will have little immediate effect on jobs.
  • Suspending expenditures of the road users tax, where there is little accountability and benefit, and realigning it to food-for-work or -school programs.
  • Realigning the Kilos Asenso Fund and other "pork barrel-type spending" towards augmenting conditional cash transfer programs.
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