Oil firms back VAT suspension

Oil industry players have expressed support for suspending value-added tax (VAT) on petroleum products, saying the move could translate into quicker and more visible price cuts for consumers.

At a Senate PROTECT hearing, representatives of both major and independent oil firms said removing VAT at the point of importation would immediately bring down costs and allow savings to be passed on more efficiently at the pump.

“Mas madali siyang i-implement… kung tatanggalin sa point of importation… it will reduce your cost (It is easier to implement if removed at the point of importation… it will reduce your cost),” said Tanya Samillano, speaking for small oil players.

She explained that once VAT is excluded from the pricing structure, the reduction is directly reflected in fuel prices. “Kung wala ‘yung VAT input… hindi na siya kasama sa cost… mararamdaman ng consumer (If there is no VAT input… it is no longer part of the cost… consumers will feel it),” she added.

Lorelie Quiambao-Osial of Shell Pilipinas Corporation also backed the proposal, noting that VAT—being percentage-based—automatically rises along with global oil prices.

“From a technical point of view, the VAT would be faster to implement… and because it is a percentage, the higher the price, the higher the VAT becomes,” she said.

Lubin Nepomuceno of Petron Corporation echoed the same stance, saying the broader industry is aligned in supporting the measure.

Lawmakers are now studying the proposal as part of a wider set of interventions to cushion the impact of rising global oil prices. Senator Bam Aquino said suspending VAT could complement the recently enacted policy allowing the temporary suspension of excise taxes on fuel.

The proposal is expected to undergo further deliberation as the government looks for ways to ease the burden of high fuel costs on consumers and key sectors.