P170B at stake in fuel VAT removal

Marikina City 2nd District Rep. Miro Quimbo opposed proposals to remove the value-added tax on fuel, warning of revenue losses and risks to the country’s credit rating.

Energy Secretary Sharon Garin backed Quimbo, saying the government could lose about P170 billion annually if the VAT on fuel is scrapped.

“The estimate is about P170 billion per year on VAT, so that’s P170 billion per year din ang mawawala sa government. It would depend on the design. But that’s adjusted also per the design of the petroleum price. Meaning, kapag nagi-increase, nag-iincrease din ang losses. It will also decide on what we want to happen, if sa price lang ba or sa importation,” Garin said in a Palace press briefing on Friday.

Quimbo said removing the VAT would not only reduce government revenue but could also affect the country’s credit standing.

“Kapag ang ating credit rating ay mababa ang number one na nakakaapekto is your ability to repay,” he said, noting that lower ratings could lead to higher interest rates on loans, including housing and business financing.

Congress recently approved a measure allowing the President to suspend or reduce excise taxes on fuel amid the ongoing oil crisis.

Garin clarified that removing the VAT requires legislative action.

“This was an imposition via legislation, and that imposition could only be removed via legislation also, which is an amendment of the National Internal Revenue Code of 1997,” she said.