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Philippine Power, Oil Sectors to Be Hit Most By New Tax Law: Senator

Posted on: Tuesday, 25 October 2005, 09:01 CDT

Philippine power, oil sectors to be hit most by new tax law: Senator

MANILA, Oct. 24 (Xinhua) -- The electricity costs will be raised by 8 percent once the expanded value added tax (EVAT) law takes effect next month, a senator warned Monday.

Sen. Mar Roxas, chairman of the Senate committees on trade and commerce and economic affairs which is investigating the impact of EVAT on prices, said in a statement that the EVAT law would hit hardest the power and oil sectors, despite the mitigating measures adopted by the government to soften the harsh effects of the new law.

Apart from the electricity consumers, oil users would also have to deal with a 7 percent increase in the prices of fuel and other petroleum products, Roxas said.

The Department of Energy and at least one private oil firm have forecast a global rollback in oil prices in November, a move that would cushion the full impact of the implementation of the EVAT.

Energy Undersecretary Peter Anthony Abaya said at the Senate hearing that prices of crude oil in the world market has stabilized because of lesser demands.

Oil magnate in the country, Petron, also told the Senate that the company would start its rolling back of the prices in diesel and unleaded gas before the end of October.

However, the Department of Energy admitted that the EVAT law would still lead to a minimal increase in the prices of fuel, such as the diesel with the price increase from 32.95 pesos (0.588 US dollars) to 33.83 pesos (0.6 dollars) per liter and the unleaded gas from 36 pesos to 39 pesos per liter.

Roxas warned that the public would especially feel the full impact of the new tax law when the Christmas season sets in.

"Christmas lights, both literally and figuratively, would not be as bright and dazzling as before," Roxas said.

He appealed to traders, sellers and vendors not to use the EVAT as an excuse to jack up the prices of the commodities that they sell.

Earlier this month, the Supreme Court lifted the temporary suspension order on the EVAT law, allowing the government to raise the sales tax rate from 10 percent to 12 percent.

The government expected the new tax law increase the revenues to 120 billion pesos (2.18 billion dollars) a year, and then help the country achieve a balanced budget and reduce debts rather than pass them on to future generations.

Source: Xinhua News Agency - CEIS

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