Press Release
May 26, 2008

"It's in the law"
Pia: Health should get 10% share from P18-B windfall from VAT on petroleum

Senator Pia S. Cayetano today said health services should get at least ten percent (10%) from the reported P18-billion incremental revenues from the 12% value added tax (VAT) on petroleum products this year because this is already in the law.

"The first thing to be done is to implement the Expanded Value Added Tax Law (Republic Act 9337) which requires under Section 21 amending Section 288 of the National Internal Revenue Code that allocates ten percent (10%) of incremental revenues from E-VAT should be allocated for health insurance premiums of enrolled indigents."

"I agree with the proposal by Speaker Prospero Nograles to use the incremental funds from VAT on petroleum to subsidize the electricity and fuel consumption of consumers, but this is not enough," Cayetano said, in reference to Joint Resolution 18, which has received bipartisan support at the House of Representatives.

"A more direct intervention to benefit the people would be to allocate part of these funds for basic health services. Additional funds will go a long way to improve facilities, increase medical staff and ensure that much-needed medicines and other basic provisions are readily available in public hospitals and community health centers," stressed Cayetano, Chairperson of the Senate Committee on Health and Demography.

The lady senator pointed out that the Expanded Value Added Tax Law (RA 9337), which lifted the exemption of petroleum products from VAT beginning July 1, 2005, already provides a mechanism for earmarking incremental revenues for health.

"It's already in the law. But for reasons known only to Malacañang, this provision remains unimplemented."

"I lobbied for this amendment in the E-VAT Law as a safety net to somehow ensure that basic services are not overlooked in the reallocation of government's anticipated windfall from the expanded coverage of VAT. But it is disappointing to know that the finance and budget departments have not released a single centavo under this provision since the law's passage in 2005."

"In fact, during the Senate deliberations for the 2008 national budget in December last year, Finance Secretary Margarito Teves himself was dumbfounded when I pointed this out to him through Sen. Juan Ponce Enrile, who was then sponsoring the budget before plenary.

"Government's failure to redistribute the billions of revenues from E-VAT which it exacts from ordinary consumers should justify calls for the suspension, or even the total scrapping of VAT, on oil and the energy sector," she concluded.

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