Manila (9 July) -- Suspending the expanded value-added tax (EVAT) on oil would mean less revenue for the government and, consequently, less funds for social welfare and infrastructure projects.

Director General Augusto Santos of the National Economic and Development Authority (NEDA) explained this dilemma confronting the government during a press briefing yesterday afternoon in Malacanang.

In effect, Santos explained that the country cannot have it both ways: pursue large scale social services and infrastructure programs, and lower taxes at the same time.

Santos was reacting to calls by certain sectors for the suspension of the EVAT on oil amidst the soaring prices of the commodity in the global market.

"While alleviating suffering (in the short term), in the mid-term government will have difficulty in funding public spending," Santos said.

At the same time, he said that "depending on the price of oil… and what we will forego," government may study the "lowering - not suspending" of the EVAT as the law is very specific that the EVAT on oil shall be 12 percent.

"Any deviation should be legislated," Yap added, even as he pointed out that government is not in a hurry to "consider right away the suspension of the EVAT."

He said people are aware that the government is trying its best to produce funds for various development projects.

The NEDA head said the government may study a "revenue-neutral suspension" of the EVAT wherein it won't earn from the controversial tax law, but the revenue will go directly to the consumers in the form of social services.

Santos said the excess revenue from the EVAT on oil is being spent on social welfare programs like the Pantawid Pamilya Pilipino Program, the Conditional Cash Transfer, electricity discounts, the diesel fuel discount for passenger jeepneys, plus the government rice subsidy.