VAT WINDFALL FROM OIL DOESN'T APPEAR IN REVENUES, CHIZ SAYS

While motorists continue to pay the inevitable VAT at the pump, the rise in oil taxes has yet to reflect on Bureau of Customs collections, prompting opposition senator Chiz Escudero to suspect the much-vaunted VAT oil dividends "a mirage."

Escudero, who has long been espousing for the scrapping of the VAT on oil said there is a "disconnect" between a supposed windfall in oil VAT collection , on the one hand, and actual Customs collections , on the other.

"If the expected hike in fuel tax collection has not materialized then where will government "squeeze its 'katas ng VAT' from which is reportedly being used to lubricate its rice and power subsidy program?" Escudero asked.

"Is the President marketing and milking a fund source that is non-existent? The Palace had committed the age-old folly of counting its chicks before they are hatched", he said.

Being a percentage tax, the VAT on oil "shadows any movement in the price of oil," Escudero said. "If oil prices have gone up, so does the VAT, and so must overall Customs collections."

Far from increasing, BOC collection in the first five months of the year, is actually below target, Escudero said.

BoC's five-month collection reached P92.6 billion, below its target of P94.4 billion. On why the agency continues to sputter in its collection despite recent "macroeconomic developments" that tend to favor it is a big puzzle, Escudero, who is also chairman of the Committee on Ways and Means said.

This year's BoC goal of P254 billion was pegged on $62-$70-barrel of Dubai oil and an exchange rate of P46 to P48 to a green buck. It was on this assumption that it was assigned a P64 billion collection target on crude oil, coal and petroleum products.

Oil has long breached the $100-dollar mark with no sign of retreating and the peso after flirting with the 41 to a dollar level for the first quarter of year is still trading below the official government forecast.

"The BoC should be exceeding its target a long time ago because two of its best friends - a weakening peso and a rising price of oil - have come into play now, "Before the global spike in oil prices, thirty centavos for every peso collected by Customs came from oil, Escudero said.

One possible culprit of flat Customs revenues, Escudero said is government's ancient nemesis: smuggling.

Due to its reliance to "tax advances" from oil companies to "prettify its collection record, the BoC may have gone soft on oil companies, "the lenient treatment being quid pro quo for the advances." Escudero yesterday said that inflation could trigger an P84 billion surge in government revenue collections this year.

He used as basis a Department of Finance simulation which showed a P10.5 billion increase in revenues for every 1-percentage point hike in inflation.

Because inflation reflects the increase in the prices of goods it would therefore increase the taxable amount, Escudero explained.

The country's inflation leapt to 11.4 percent in June from a year earlier�the fastest rate recorded in 14 years�due largely to the substantial increase in the cost of rice, which soared by P43 percent, and other food products.