DoF warns against fuel excise suspension, backs targeted relief for vulnerable sectors
THE Department of Finance (DoF) once again warned against any moves to suspend the fuel excise tax, saying that it would have the perverse effect of providing relief to well-off consumers, who are the country’s leading fuel users.
DoF Chief Economist Gil S. Beltran, in an economic bulletin on Monday, said that while high global energy prices eventually flow on to domestic prices, any suspension of the fuel excise ultimately provides relief to those who need it least, even if the intent is to dampen inflation.
“Higher energy prices in the world market ultimately get translated into higher local pump prices,” Mr. Beltran said. “However, it would be a policy mistake to suspend fuel taxes since it will be the top 10% of the population that will gain the most as they account for nearly half the fuel consumption in the country.”
In April, inflation came in at 4.9%, the highest reading in over three years.
According to the Department of Energy, the price of diesel has risen P30.30 per liter in the year to date, kerosene P23.90, and gasoline P17.80.
He said the preferred response is targeted fund transfers to vulnerable groups, and a suspension of the excise.
“The lingering effects of the African Swine Fever (ASF) continue to threaten food security… further complicated by (geopolitical uncertainties) that have implications on both food and energy security,” Mr. Beltran said. “Moreover, avian flu outbreaks in parts of the country pose a threat to the poultry sector.”
Mr. Beltran recommended the restoration of hog populations while importing meat as a temporary measure to boost supply, and moving decisively to contain the avian flu outbreak.
“Non-food price inflation will continue to be driven by developments in the global energy market,” Mr. Beltran said.
Dubai crude, the benchmark oil price for Asia, averaged $102.68 a barrel in April, up 64.6% from a year earlier. It declined 9.2% month on month. — Tobias Jared Tomas
