The Philippines will not achieve its goal of becoming a rice-sufficient country if the expanded-value added tax (EVAT) imposed on oil products is removed, Budget Secretary Rolando Andaya said Thursday.
“If we’re going to remove VAT [on oil] next year, our problem in domestic rice will worsen,” Andaya told radio dzMM.
Andaya said that according to a study conducted by the Department of Finance, the Department of Agriculture (DA) would need around P50 billion to achieve the goal of rice self-sufficiency by 2010.
He said the amount fits the government’s revenue from the 12-percent EVAT on oil products.
Andaya said the P50 billion will be used to modernize the agriculture sector, including the construction and renovation of irrigation systems, post-harvest facilities and production of seedlings.
He said the amount will be given to DA in partial for three years starting 2008.
Various sectors, including transport groups, had been urging the government to remove EVAT on oil products to cushion the rising prices of oil in the world market.
Oil companies had been implementing price increases weekly since May. Fuel prices have gone up to more than P50 per liter.
Govt benefits from high oil prices
Andaya said the government has been benefiting from the high prices of oil products in terms of revenue.
Malacañang has announced that EVAT on oil products and power produced an excess of P4 billion revenues for the government by way of EVAT on oil products.
The government expects to collect P14 billion in excess revenue from oil EVAT this year.
The budget secretary insinuated that EVAT is the most important tax being imposed by the government.
“It’s easy to say that VAT should be removed. But it’s also the easy way to bring down our country,” he said.
Metro Manila ‘lifeline users’ first
In a related development, Andaya said his department has released an initial P500 million that would be used to distribute “power subsidy” for lifeline users. Lifeline users are households consuming below 100 kilowatt per hour electricity per month.
He said the amount will be ready for distribution in Metro Manila within the week.
The amount, he said, is part of the P2-billion power subsidy for four million lifeline users in all franchise areas of the Manila Electric Co.
Executive Secretary Eduardo Ermita announced Wednesday that President Arroyo instructed the Presidential Task Force on Energy Contingency to use the P4 billion excess EVAT collections as subsidy for poor Filipinos, who are most affected by the high prices of fuel and electricity.
The P2-billion power subsidy is part of the said amount. The remaining amount will be used by the government for student assistance and subsidy for the transport sector.
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