‘VAT to raise gas prices by P3’

As expected, fuel consumers are in for more grief at the gas pumps as a result of the recently passed value-added tax (VAT) law.

The pump prices of regular, premium and high-octane gasoline could go up by as much as P3 per liter once the new VAT law takes effect, House Minority Leader Francis Escudero said yesterday.

He said gasoline prices are now in the neighborhood of P30 per liter and a 10 percent VAT means an increase of P3 per liter.

The extra 10 percent comes from the lifting of VAT exemptions on the fuel industry sector, leading to an increase in costs that the fuel companies will be allowed to pass on to consumers.

He said there will be smaller adjustments in diesel fuel, kerosene and bunker oil, which is used by power plants, because the excise taxes on these products are to be scrapped and replaced by VAT.

But the 10 percent VAT on diesel, kerosene and bunker oil would actually be greater than the excise taxes to be scrapped, he added.

The excise taxes on these products are P1.63, 60 centavos and 30 centavos per liter, respectively.

Escudero also reiterated that he and his opposition colleagues would challenge the constitutionality of the VAT Reform Bill before the Supreme Court when it goes into effect.

"We will file the petition when the law takes effect, 15 days after its publication in the newspapers," he said.

He said as of yesterday, 40 opposition members had signified their intention to sign the petition.

"That is not counting some members of the majority who want to join us," he added.

A separate petition will be filed by opposition senators led by Minority Leader Aquilino Pimentel Jr.

For his part, Tarlac Rep. Jesli Lapus, who headed the House panel in the bicameral conference on the VAT bill, said the government should see to it that manufacturers and traders "do not pocket the mitigating measures" that the conferees included in the bill, such as the abolition of excise taxes on diesel, kerosene and bunker fuel.

"They should reflect these in their prices in the form of discounts," he said.

He said with the new VAT law, "the burden is squarely in the hands of the executive (Malacañang) to solve the fiscal mess and effect a trickle-down economic boom."

"Let us give the administration a year to perform and live up to its promises of cure from the bitter pills it prescribed," he said.

In a related development, Sen. Joker Arroyo has written a separate dissent to the bicameral conference committee report on the VAT reform measure.

"I stress my opposition to the increase in the VAT rate from 10 percent to 12 percent… for the simple reason that the increase is something that social classes E, D and C, in light of their limited earnings, cannot absorb," he said.

The other ground he cited in opposing the conference committee report is the fact that the panel deleted the "no pass-through" provision, which would compel power producers and oil companies to absorb VAT in their costs and prohibit them from passing the increase on to consumers.

Arroyo noted the "no pass-through" provision was present in both the Senate and House versions of the VAT bill.

"Thus, there was nothing for the two houses (of Congress) to reconcile because they were not in disagreement. Yet, the bicameral conference, in total disregard of the plenary decision of both houses, deleted the no pass-through provision," he said.

Without the provision, he noted, oil companies are allowed to pass along the tax to customers.

Arroyo is the only bicameral committee member who wrote a separate dissent, copies of which were obtained yesterday by reporters covering the House. He voted with the opposition in the Senate against the VAT bill.