Lifting of Oil Vat Could Have Mitigated High Inflation — Ibon

As inflation in the country rose to its highest in nearly 17 years, independent think-tank IBON Foundation says that while unavoidable, inflation could have been moderated if government had not insisted on taxing the people through the oil value-added tax (VAT).

The National Statistics Office reported that high fuel costs drove the inflation rate to a 12.5% high in August. According to IBON, the removal of VAT on oil would have immediately brought down the cost of fuel prices by 12 percent. Pump prices are estimated to go down by P4 a liter and liquefied petroleum gas (LPG) by P60 per 11-kg cylinder without the VAT on oil. These could have brought immediate relief to millions of Filipinos through savings on their fuel bills, while bringing down production costs of fuel-intensive establishments.

High prices of commodities could also have been mitigated if government had not surrendered control over the oil industry by maintaining oil deregulation.

Inflaton bears most heavily on the poor who already struggle with record joblessness and falling incomes. But government continues to implement the RVAT in its obsession to reduce the budget deficit and continue servicing its public debt. For the people, however, all these have only meant higher prices and drastic cuts in income, consumption and welfare. (end)

IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.

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