Press Release
January 27, 2019

Koko moves to lift VAT on oil products

Senator Aquilino "Koko" Pimentel III has called for the exemption of petroleum products from the coverage of value-added tax (VAT) to help cushion the impact of the implementation of the second tranche of excise tax on fuel effective this month.

"As a means of easing the burden on the public, this bill proposes to exempt petroleum products from value-added tax. So as to retain some revenue for the government, excise tax on petroleum products shall still be imposed," Pimentel said.

The senator's move was prompted by the effects of the Tax Reform for Acceleration and Inclusion Act (TRAIN) or RA 10963 following the implementation of the first tranche of excise tax on fuel in January last year, and the second tranche this year.

"Since the implementation of the TRAIN Law, fuel prices and prices of other goods and commodities have steadily risen. While the uptick in inflation was anticipated, the sharp rise in global crude oil prices was not," Pimentel said.

"As a result, Filipinos have had to contend with higher prices on both basic goods and transport," he said.

Under Senate Bill No. 2163, Pimentel proposed that the importation or sale of petroleum products be included in Section 109 of the National Internal Revenue Code of 1997 which already exempts from VAT drugs and medicines prescribed for diabetes, hypertension and high cholesterol. The exemption had been made applicable as well on the sale by manufacturers, distributors, wholesalers and retailers of drugs and medicines prescribed for the treatment and or prevention of diabetes, high cholesterol and hypertension starting January 1, 2019.

Consumers, however, are expected to reel from the effects of the additional excise tax on fuel products as the TRAIN Law imposes the second tax hike this month: another P2 per liter on diesel and gasoline, P1 per liter on kerosene and P1 for every kilogram of cooking gas or liquefied petroleum gas (LPG).

These increments which would become applicable by middle or end of the month, would impact pump prices by around P2 to P3 per liter, reports said.

Pimentel's bill has already been referred to the Senate Committee on Ways and Means chaired by Sen. Sonny Angara for consideration.

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