The government vowed to intensify its market- monitoring activities to prevent unscrupulous manufacturers and retailers from unduly jacking up prices due to the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law.
The Department of Trade and Industry (DTI) on Wednesday also called on retailers and manufacturers to absorb the “minimal” impact of TRAIN on most products.
“Manufacturers and retailers should not increase prices. We will be on the lookout for hoarders and profiteers,” Trade Secretary Ramon M. Lopez told reporters in a text message.
Lopez downplayed the impact of the TRAIN law on commodities and services. He noted that, based on previous reviews, the impact of the tax-reform package on inflation is at 0.7 percent and the overall impact on prices is at 7 percent to 8 percent.
“For most products, TRAIN has a minimal impact in inflation. The increase brought about by the excise tax is 7 [percent] to 8 percent, and the fuel and transport cost as percentage of production cost is less than 5 percent,” he said.
“This minimal impact should not alter SRPs and absorbed by companies. Companies also do not tend to individually increase price for fear of losing market share,” Lopez added.
However, for specific goods identified in the TRAIN law, the DTI noted that the current inventory would be enough for traders to hold off any price increases until mid-January.
For example, the excise tax on refined and manufactured mineral oils and motor fuels will increase, while sugar-sweetened beverages will be slapped a tax of P6 or P12 per liter, depending on the sweetener used.
“TRAIN will have no impact yet on gas stations as they carry inventory sans the higher excise tax and [the price] will stay for two to three weeks.For the sugar-sweetened beverages,we’re getting confirmation from soft drink companies regarding their current inventory, but they usually have two weeks’ worth of supply,” Lopez said.
In a statement, advocacy group Laban Konsyumer Inc. called on the government to appoint a “price czar.”
“We appeal to the President and his economic team that a price czar be appointed to perform specific work and mandate and lay the basis and foundation of an organized and reasonable implementation of the TRAIN Act,” said Laban Konsyumer President Victoria Mario Dimagiba, who is a former trade undersecretary for consumer protection.
Pump prices
The Department of Energy (DOE) expects oil firms’ current inventory levels to last for 15 days, which means local pump prices are not expected to increase anytime soon, amid the implementation of the new excise tax and value-added tax (VAT).
“We are expecting fuel prices not to increase in the next 15 days based on the 15-day minimum inventory requirement of oil companies, agency records and projections,” Energy Assistant Secretary Leonido Pulido III said in a news briefing on Wednesday.
Sought for comment, Phoenix Petroleum Vice President for External Affairs Raymond Zorrilla said “we maintain at least 15 days.”
PTT Philippines General Manager Danilo Alabado said, “We are still in the process of accounting our old inventory and projection to determine until when our old stocks will last.”
Pilipinas Shell said it has yet to receive advice from retailers regarding current inventory levels.
“If you are asking about the stocks in the retail stations, we are still checking it from our retail group,” company spokesman Cesar Abaricia said.
Based on DOE figures, Energy Undersecretary Felix William B. Fuentebella said the price of gasoline, which is currently pegged at about P47.15 per liter, will increase by P2.97 to P50.12 per liter; diesel will go up by P2.80 per liter, from P36.50 per liter to P39.30 per liter; and kerosene prices will rise by P3.30 per liter, from P42.50 to P45.80 per liter once the old stocks of oil firms are depleted.
Liquefied petroleum gas (LPG) prices are expected to go up by P12 from the current P550 per 11-kilogram cylinder. Pulido said LPG prices are expected to remain at current levels “since they have an inventory of seven days.”
The DOE clarified that the implementation of excise tax and VAT for petroleum products under the TRAIN does not apply to the old stocks of petroleum products, including their stocks under the 15-day minimum
inventory requirement.
Consequently, retailers should not charge the new excise tax to the consumers.
“The Oil Industry Management Bureau has issued an advisory to petroleum products stakeholders not to levy new excise-tax rates on old stocks, considering that excise taxes are levied upon importation and not at the point of sale to the consumers,” Pulido said.
While the DOE said it stringently monitors oil trading in the international market and analyzes its effects on the domestic prices of petroleum products as mandated by the oil deregulation Law of 1998, it wants oil firms to submit their inventories to determine the supply that will be sold with and without higher excise taxes.
“The DOE must know the inventory of the oil firms and we will trace every retail station how much is the impact of the excise tax and when it will take effect on their respective stations,” Fuentebella said.
The energy department has also invited the oil companies to a meeting to clarify the mechanisms in the implementation of the new tax law. The agency said the oil companies concurred to share their data regarding their sales to the dealers/retailers to determine which stocks will be applied with the excise tax.
According to the DOE, oil firms agreed to submit their stock inventories as of the December 31, 2017, cutoff date under a notarized document to be submitted to the agency.
For transparency, oil companies will also require their retailers to post the new rates and when these will be effective.
At the same time, the agency called on the public to report unscrupulous retailers.
The DOE and other relevant government agencies would also conduct random audit and monitoring activities, both in the depot/refinery and the retail level or gasoline stations.
“Aside from honesty system and cooperation that we are asking from oil-industry participants, we are conducting random tests together with other relevant government agencies, such as the Bureau of Internal Revenue and local government units,” Fuentebella said.
“If we need to monitor every single retailer, we will do so just to protect the consumers. The oil firms must show us their authenticated and notarized documents that will be submitted to the DOE to maintain transparency and honesty for the consumers’ sake,” he added.