MANILA – Oil industry stakeholders have expressed support for proposals to suspend the value-added tax (VAT) on petroleum products, saying the measure could help bring down pump prices more quickly for consumers.
At the second hearing of the Senate’s Proactive Response and Oversight for Timely and Effective Crisis Strategy (PROTECT), representatives from the oil sector said removing VAT at the importation stage would immediately reduce fuel costs and streamline the process of passing price reductions to motorists.
Tanya Samillano, speaking for small oil players, said eliminating the tax at the point where petroleum products enter the country would simplify implementation and lower the initial cost of fuel.
“Mas madali siyang i-implement kung tatanggalin sa point of importation… it will reduce your cost,” Samillano told senators.
She noted that once VAT is removed from the supply chain’s starting point, it will no longer form part of the pricing formula, allowing consumers to feel the impact of price cuts sooner.
“Kung wala ‘yung VAT input… hindi na siya kasama sa cost… mararamdaman ng consumer,” she added.
Shell Pilipinas Corp. president Lorelie Quiambao-Osial also backed the proposal, explaining that VAT collections increase along with oil prices since the tax is computed as a percentage of the product’s value.
“From a technical standpoint, suspending VAT would be faster to implement. Because it is percentage-based, the amount collected rises as oil prices increase,” Quiambao-Osial said.
Petron Corp. General Manager Lubin Nepomuceno likewise said the company aligns with the industry’s support for a VAT suspension as part of efforts to ease the burden on consumers.
Lawmakers are currently exploring policy options to mitigate the effects of surging global oil prices. Among these is the recently enacted measure that authorizes the temporary suspension of fuel excise taxes during periods of unusually high prices.
Senator Bam Aquino said the proposed VAT suspension is being studied as an additional intervention that could help reduce fuel costs, particularly as global supply challenges continue to drive up prices.
The proposal is expected to undergo further discussions in the Senate as part of a broader strategy to cushion the impact of the oil price surge on households and key sectors of the economy.
ia/xf
