ROXAS: NEAR-BALANCED BUDGET ALLOWS FOR OIL VAT SUSPENSION

Senator Mar Roxas said the near-balanced budget for the entire 2007 as announced by the Finance department would prudently allow for a temporary suspension of the value-added tax (VAT) on oil products, to ease the plight of ordinary Filipinos while ensuring sustained fiscal stability.

"Our 2007 deficit is only at P9.4 billion, roughly seven times smaller than the deficit target of P63 billion at the start of last year. If we suspend the VAT on oil products for six months - which the government has admitted would have a relatively small impact of P15 billion - we will still be on track for a balanced budget," said Roxas, the Chairman of the Senate Committee on Trade and Commerce.

"Suspending the VAT on petroleum goods is an appropriate response to our improved fiscal standing, especially with the reduced spending that our people face due to record-high prices of oil," he added.

The Liberal Party President noted that even with a suspended VAT on oil products, the government's deficit would reach only around P25 billion, still less than 0.3% of the P6.65-trillion GDP for 2007. Prior to this, the government had targeted for the deficit to be 0.9% of GDP.

"Our fiscal rating has been recently upgraded by Moody's, and the government is very capable of providing this much-needed relief for our people. Clearly, we can maintain both the trust of our people and that of international credit rating agencies," he said.

"Our people do not accept that our policymakers are helpless in this issue; they can very well spur consumer spending and the economy as a whole by not collecting the VAT on petroleum products," he added.

Roxas has filed Senate Bill No. 1962 for the suspension of VAT on oil products for six months, which is now being heard by the Senate Committee on Ways and Means. A counterpart bill has been filed in the House by fellow LP stalwart Cavite Rep. Joseph Emilio "Jun" Abaya. The Constitution requires a tax measure to be passed in the House before being discussed in the Senate plenary.

"I believe my colleagues in the House recognize the urgency of this measure, and will roll it out at the soonest possible time," Roxas said.