P-Noy: 12% oil VAT used to subsidize MRT, LRT fares

MANILA, Philippines - President Aquino explained that the 12 percent value added tax on oil products will not likely be lifted since the government is paying for various social programs as well as subsidizing the transportation fares of commuters of the Metro Rail Transit and Light Rail Transit.

He said the revenues from current taxes were being used for social programs like the Pantawid Pasada program for jeepney and tricycle drivers.

The subsidy is being given to stop them from seeking fare increases.

Aquino said the government would not want to artificially lower the price of fuel only to heighten demand.

“There is an economic reality that if something becomes cheaper, normally there will be more consumption of it, that is universal. When the price of fuel is rising, of course you will save, use only what you need. So what we need to import is only what we consume,” the President told reporters in Baguio City Sunday night after attending the Philippine Military Academy graduation rites.

He said importing more fuel would result in more problems for the country.

“Let’s bring back (the revenues) to those affected by the spiraling of crude prices – the transport groups – and through them lessen the impact on the riding public,” Aquino said.

“We are still continuing, in effect, the subsidy for the LRT and the MRT lines. As you know, it costs us about P60 for every passenger for each trip and we charge, if I’m not mistaken, less than P15 for the trip. So the plan is to bring it up at least to the level of an air-conditioned bus. If you take the LRT or MRT, (there are) fewer stops and cheaper, it’s more comfortable, it’s faster, et cetera. But we’re selling it at a cheaper price,” Aquino said.

The President said it would have been fair to collect MRT and LRT fares as buses do “but we have delayed implementation of the same given the fact that we don’t want to add to the burden of the people in terms of the spiraling oil prices.”

“And if I may just add, the head of the world’s biggest economy, I understand (US) President (Barack) Obama has already stated also what exactly can they also do in terms of the prices of oil. They have talked to Saudi Arabia amongst others to increase the supply of oil and to temper oil price hikes. There are issues in the whole industry that did not invest for such a long time. The refining capacity, production capacities... We want to lower prices. How do you actually lower them? That’s why we want to develop our own indigenous sources. In Mindoro Oriental, besides hydro there is potential for geothermal but the wind (power) is already clear. So that would lessen our dependence on oil,” Aquino said.