This is a very, VERY complicated topic 
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MANILA, Philippines — The Department of Finance (DoF) and Bureau of Internal Revenue (BIR) are in favor of removing the Value Added Tax (VAT) on oil, provided that the excise tax will be able to produce the same revenues as VAT can provide, officials told the House of Representatives Tuesday.
During the continuation of the hearing by the committee on ways and means on the removal of VAT on oil and electricity, DoF undersecretary Gil Beltran said the excise tax should be able to provide the expected P18.6 billion in revenues from July to December of this year that VAT would provide, based on forecasts by the agency.
“If we break the VAT chain, we will lose all the revenues…if we really have to replace the VAT with an excise tax, we suggest that the excess tax will maintain the revenues of tax,” he said.
Several bills have been filed by lawmakers like House Bill 4268, “Shifting the form of taxation on crude oil and petroleum products from VAT to excise tax,” and House Bills 3440 and 3511, exempting electricity and oil from VAT.
Under Section 148 of the National Internal Revenue Code of 1997, the excise tax on petroleum products, fixed tax rates should be collected by the government on corresponding petroleum products.
For lubricating oils, an excise tax of P4.50 per liter should be collected; P0.05 for processed gas; P3.50 for petrolatum and waxes; P0.05 for denatured natural oil, leaded gasoline for P5.35; and unleaded gasoline with P4.35.
Beltran said that if VAT would be repealed, the government would be losing an estimated P24 billion of revenues from July to December and social service programs for the poor would be sacrificed.
“VAT is a progressive tax. It will benefit lower income groups, while higher income groups who purchase luxury items will pay higher taxes. It is better to collect the tax and allocate the proceeds to direct transfers to the poor,” he added.
But Gabriela partylist Representative Liza Maza countered that although revenues have increased because of VAT, the funding for social welfare programs have decreased, particularly on education, housing, health, and hunger mitigation.
“I cannot understand why there is an increasing VAT collection but decreasing budget for social services. Where did the other VAT collections go?” she said.
Meanwhile, Beltran also disclosed that for electricity, the government was able to collect more than P1 billion of revenues from both lifeline and non-lifeline consumers.
But Consumer and Oil Price Watch (COPW) chief Raul Concepcion said he was not in favor of non-lifeline consumers being subsidized by lifeline consumers.
Lifeline consumers are those consuming less than 100 kWh of electricity per month.
“Non-lifeline consumers pay for both the VAT and discount of lifeline consumers,” he said.
Inside out 