Press Release
April 25, 2006


Reacting to the proposal of Rep. Joey Salceda and Secretary Michael Defensor for a temporary halt on the expanded value added tax on oil and power to cushion the impact of surging crude and petroleum prices, Senator Mar Roxas yesterday urged the government not only to defer the E-VAT on power rates but exempt power rates from the E-VAT.

I dont want to sound repetitive but that was what we in the Senate proposed a year ago, in August 2005, when we filed a bill to repeal certain provisions of R. A. 9337 or the E-VAT Law, Roxas said.

Roxas pointed out that an executive-legislative agreement for such an exemption would give full meaning to the forthcoming celebration of Labor Day.

This would give all workers immediate relief, Senator Roxas said.

The chairperson of the Senate committees on economic affairs and on trade and industry was referring to Senate Bill No. 2080 which he principally authored and which, together with ten other senators, namely Senators Rodolfo Biazon, Miriam Defensor Santiago, Jinggoy Ejercito Estrada, Juan Ponce Enrile, Luisa Loi Estrada, Richard Gordon, Manuel Lapid, Ramon Bong Magsaysay, Ramon Revilla Jr. and Senate President Franklin M. Drilon, has been filed shortly after the E-VAT law was enacted last year.

The Senate proposal seeks to exempt the generation, transmission, distribution, and supply of power from the coverage of the new VAT law and to delete the limit on power rates creditable input VAT.

In seeking for the exemption, Roxas said he and his colleagues would like to lighten the heavy burden the E-VAT would unduly impose on Filipino households as well as on businesses.

The E-VAT means an additional 81 centavos per kilowatt hour for electricity users even after the two percent national franchise tax on electricity distributors is removed, Roxas said, adding:

This further means that for households consuming 200 kw a month, they are now paying an additional P167.49, a substantial amount for working-class Filipinos caught in hard times such as these.

The Arroyo administrations proposal comes on the heels of the galloping prices of crude oil in the world market, currently at US$75 per barrel and still rising, and was made apparently to mitigate its impact on the economy and consequently on Filipino consumers.

Roxas said that when he made his exempt proposal in August 2005, the price of crude was only US$65 per barrel, up from the US$30 per barrel a year before.

With the current crude oil prices at all-time highs which would eventually translate to higher power costs, the resultant higher electricity rates will adversely affect consumers, industries and jobs, investments, and the economy in a big way, he warned.

The proposal of the Presidents economic advisers is welcome and I agree that we, the government and private sectors, must work together on safety nets and contingency measures to mitigate the pain of a global oil crisis. However, in my view, to defer the E-VAT on power rates is to ease temporarily the Filipino consumers pain, whereas a permanent exemption would give consumers a feeling of security and inspire businesses and investors, Roxas said.

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