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PIA Press Release

PGMA says she made right decision in not lifting VAT on imported oil

Manila (17 July) -- President Gloria Macapagal-Arroyo stressed that her decision not to lift the expanded value added tax (VAT) on oil imports was the right thing to do.

"If VAT on oil and power is lifted, how do we replace more than P70 million in revenues, mostly used to fund projects for the poor?" she said.

The President made the statement in response to the calls of her critics for the suspension of the implementation of the VAT, and the scrapping of the oil deregulation law as a means to soften the impact on the people of skyrocketing oil prices.

The President defended her decision on the VAT this morning when she led the launching of the Switch Movement and "Palit Ilaw (Bombilya)" Electricity Conservation Program of the Department of Energy (DOE) at the Philippine International Convention Center (PICC) in Pasay City.

In her speech, she announced that the national government, through the DOE, is allocating P500 million for the procurement of compact fluorescent lamps to be distributed to all poor households in the National Capital Region (NCR).

The allocation will be sourced from the P4-billion revenue generated by VAT during the second quarter of 2008 (April to July).

She explained that VAT boosted investor confidence in the Philippines while peso strengthened from P56.51 to $1; then P40.23-$1, before the oil and rice prices pushed back the pesos to P45.55 a $1.

"Imagine, if without VAT our starting point was P55. Wouldn't the removal of VAT erode confidence, lift exchange rates, lift interest rates and therefore raise cost anyway and slowdown the economy?" she said.

The President said the reason the Palit Ilaw was frozen for months was because the government had no alternative resources to finance the electricity efficiency program.

The launching of Palit Ilaw, which was originally set for Dec. 2007, was moved to January this year due of the lack of funds.

"Yes, let us discourse, debate and without delay decide, but wherever our discourse leads let me assure our people of one thing, your government shall continue to harness all the resources at our command to help ordinary Filipinos" she said.

She also stressed that national fuel conservation is entrenched as the first principle of the state under her stewardship.

As the initial salvo of the project, the President ordered all government agencies to reduce their electricity bill by 10 percent by switching from incandescent bulb to energy-efficient compact fluorescent (CFL).

Aside from government offices, the President also instructed concerned agencies to replace existing incandescent lamps with CFL, and use CFL in all highways and major thoroughfares, government hospitals, and public places.

Earlier this morning, another Katas ng VAT program, a P500-million micro-financing livelihood assistance for the wives and immediate family members of the drivers and conductors of all public utility transportation, was launched by the President, also at the PTTC.

The Palit Ilaw (Bombilya) or Switch to Compact Fluorescent Lamp (CFL) from incandescent bulb, is one of the alternative solutions that the Switch Movement had proposed to lessen the electricity consumption during the 2008 Philippine Energy Summit held earlier this year.

Switch Movement is a nationwide social mobilization campaign that seeks to demonstrate how ordinary Filipinos, local communities and specific sectors of Philippine society can contribute substantively - through fundamental changes in lifestyle, behavior, attitudes or standard practices -to address the dire consequences of skyrocketing oil prices and climate change.

Joining the President in the simultaneous switching ceremony were Pasay City Mayor Wenceslao "Peewee" Trinidad, Manila Mayor Alfredo Lim, Boyet Montiel, who represented Quezon City Mayor Feliciano Belmonte; Paranaque City Mayor Florencio Bernabe Jr., Mandaluyong City Mayor Benjamin "Benhur" Abalos Jr., Makati Representative Abegail Binay representing her father Jejomar Binay;

Marikina City Mayor Ma. Lourdes Fernando, Mark Anthony Santos representing Las Pinas City Mayor Nene Aguilar, Valenzuela City Mayor Sherwin Gatchalian, Jet Pabilonia representing Muntinlupa City Mayor Aldrin San Pedro, Navotas Mayor Tobias Tiangco, Pateros Mayor Jaime Joey Medina, Malabon City Mayor Canuto Cenon Oreta, Taguig City Vice Mayor George Elias, San Juan City Vice Mayor Leonardo Selias, Caloocan City Vice Mayor Luis Tito Varela, and representative from Pasig City. (PIA-MMIO) [top]

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