TRADE Secretary Ramon M. Lopez has conceded that fuel prices have really gone through the roof, but insisted the scheduled next round of increases on oil and coal taxes must take effect because it is what the law says.
In an interview with the BusinessMirror, Lopez admitted the string of oil-price hikes the past weeks could be challenging for consumers, particularly the poor. However, he will not go out of his way to call for the suspension of the excise tax on oil under the Tax Reform for Acceleration and Inclusion (TRAIN) law.
“It [rising fuel prices] is a challenge. The problem is we have a law. As for me, I will go [with] what is in the law. We have a provision there that if Dubai crude reaches $80 per barrel, then the provision on petrol tax will be suspended,” Lopez explained in a mix of English and Filipino.
He added that deferring the next round of increases on oil and coal taxes will be at the expense of the government’s social services, to which 30 percent of the TRAIN’s revenues are penciled. “I will leave it at that because if I agree to suspend the taxes, what about the pending programs to which they are allocated for?” Lopez said.
“Yes, maybe they’ll pay a little higher for this, but education is free, as well as health, and the roads and infrastructure are better, including the wages of our uniformed men. There really are benefits across sectors,” he added.
Pump prices of petroleum products on Tuesday rose for the ninth consecutive week: gasoline by P1 per liter, diesel P1.45 per liter and kerosene P1.35 per liter.
This prompted senators to gather authorities next week in an effort to address the spiraling prices of fuel. On the other hand, opposition lawmakers, such as Senate Minority Leader Franklin M. Drilon, look to file a joint resolution seeking to suspend the higher excise tax on oil.
The TRAIN imposed excise tax on petroleum products of up to P6: P1 in 2018, P2 in 2019 and P3 in 2020. The next round of increase—by P2—will be implemented on January 1, 2019.
The law is the law
Lopez said he understands the sentiment of consumers and businesses, but demanded the law be followed. However, he said if taken in isolation, suspending the excise tax on oil will provide relief to the public, especially the poor.
“If world crude hits that $80 per barrel mark and the excise tax on oil is suspended, I, too, believe it will be a big help for consumers. I’m not recommending it because we have to comply with the law, but we can see this [suspension of fuel tax] will benefit the people,” the trade chief argued.
The Philippine Chamber of Commerce and Industry (PCCI) and the Employers Confederation of the Philippines have recently moved for the suspension of petrol tax as a way to control transport and power costs.
Last week PCCI also proposed, among others, the deferral of the next round of increase on coal taxes to make power cost competitive. The TRAIN imposed a tax of P50 per metric ton on both local and imported coal every year until January 1, 2020, when the rate peaks at P150 per MT.
“The Asean [Association of Southeast Asian Nations] is a dynamic location for investments, and the Philippines is competing for investments in heavy industries, manufacturing and technology against countries like Thailand, Indonesia and Vietnam. The power rates of these countries are significantly lower than that of the Philippines at between P4 to as much as P7 per kilowatt-hour,” the PCCI said.
“Competitive power rate has been elusive. Sixteen years into the passage of the Electric Power Industry Reform Act and yet the goal to ensure reliable and affordable power supply has yet to be achieved,” it added.
DOE statement
The Department of Energy (DOE), in an effort to address the growing unease over the steady rise in world fuel prices as compounded by the higher excise tax, said all agencies in the energy sector “are united in taking steps to ease the effects of rising prices, particularly of oil and other petroleum products.”
In a statement, the DOE explained that “the rise in petroleum prices is due to the current global situation where international political and economic factors are at play.” It cited these current developments:
- US exit from the Iran nuclear deal was accompanied by its re-imposition of economic sanctions on Iran, including those related to oil;
- Political and economic instability in Venezuela, which has the world’s largest proven oil reserves and is considered one of the largest oil exporters in the West; and
- A lack of clear commitment from oil producing countries for an actual production increase to replace expected supply constraints.
Global oil prices, the DOE explained, “also tend to go up in the winter months [October-March], as demand for heating is at its highest.”
The DOE claimed that “even before the onset of the spike in world petroleum prices, the energy family has been relentless in working out ways to help our most vulnerable sectors such as transport groups. Public-utility vehicles are able to avail of fuel discounts through the continued expanding partnership of the DOE with various oil companies.
The Philippine National Oil Co.-Exploration Corp. has, meanwhile, been asked to look into importing low-cost diesel to augment supply and offer a more affordable fuel option to our public transportation sector.
“We are also part of the interagency Pantawid Pasada program being led by the Department of Transportation, where fuel subsidy cards are being distributed to qualified franchise holders of public-utility jeepneys,” the DOE added.
The agency appealed to the public “to adopt simple yet far-reaching changes in the energy choices we make, with efficiency at its core,” such as using fuel wisely.
“A mind-set on energy efficiency is key to living an energy efficient lifestyle. Helping bring down the overall energy demand of our country is hinged upon our energy habits. We already have the energy ability. Let us hone it by being smart about our energy choices may it be on fuel or power. Simple tasks such as turning off appliances that are not in use become second nature when done repeatedly. In addition, switching to LED lighting and inverter technology significantly reduces our power consumption, which means lower electricity bills,” the DOE said.