MANILA, Philippines--THE INTERNATIONAL Monetary Fund is not in favor of proposals for the government to lift the 12-percent value-added tax on oil, saying it was not a prudent way to help the poor cope with rising commodity prices.

Reza Baqir, IMF resident representative to the Philippines, said lifting the VAT on oil would only benefit mostly wealthier families because they were the ones who consume more petroleum products.

What the government should do was to use the revenues from the imposition of the VAT on oil to fund more social services for the masses, the official said.

"Our analysis has shown that the poor are better protected by increasing social spending than reducing energy taxes. This is so because the benefits of social spending are better targeted at the poor than those of reducing gasoline taxes," Baqir pointed out.

An IMF study showed that Filipino households belonging to the bottom 10 percent (in terms of spending capacity) spent 64.8 percent of their income on food and nothing on gasoline and diesel.

On the other hand, the top 1-percent (richest Filipino households) spent 3.6 percent of their income on gasoline and diesel for their transportation requirements.

The study also showed that the poorest 10 percent of households spent an average of only 1.6 percent of their income on land transport fares, while spending by middle-income families reached as high as 3.8 percent.

Another highlight of the study showed that electricity accounted for only 1.1 percent of total spending of the poorest 1 percent of Filipinos families, but accounted for 3.6 percent of the total spending of the richest 1 percent of families.

Baqir said the VAT Reform Law, considered the centerpiece of the Arroyo administration's fiscal reform agenda, was recognized by the foreign investor community for its ability to help improve government revenues.

The law raised the VAT rate to 12 percent from 10 percent and expanded its coverage to include oil and electricity.

"A reversal of these reforms could threaten to erode recent gains, which would also hurt the poor," Baqir said.

The proposal to lift the VAT on oil is being advocated by some legislators, led by Sen. Manuel Roxas II.