By Jenina P. Ibañez, Senior Reporter
EXCISE TAXES on fuel should be absorbed by oil companies to slow down price spikes shouldered by consumers without sacrificing government revenues, an analyst said.
“Oil companies should absorb the excise tax and not pass it on to consumers,” Center for Energy, Ecology, and Development Executive Director Gerry C. Arances said in a Viber message.
“That is the most equitable solution, allowing revenues to be used for social services while at the same time lowering the price of petroleum products.”
The Department of Energy (DoE) has renewed its call for the suspension of excise tax on fuel products in a bid to slow the rise in fuel prices.
But Mr. Arances said the call for suspension is a “false dilemma” because it secures company profits “at the expense of everyone else in the country.”
Local oil firms last week raised gasoline prices by P1.20 per liter, diesel by P1.05, and kerosene by P0.65. Since the start of the year, prices of gasoline, diesel, and kerosene products have risen by P7.95, P10.2, and P9.10, respectively.
The Bangko Sentral ng Pilipinas (BSP) has indicated that it is monitoring global crude oil prices to the extent that they affect inflation prospects.
Current oil prices are caused by short supply and higher demand due to a global economic rebound, BSP Governor Benjamin E. Diokno said.
Mr. Arances said that fossil fuel volatility prompts a need for energy security backed by renewable sources and the use of electric vehicles.
“If we were even in the initial stages of the transition, oil companies themselves would be hesitant to raise prices for fear of accelerating the transition to renewables, avoiding our current predicament altogether,” he said.
Previously, the Department of Finance said a suspension of excise tax on fuel is inequitable because it would translate to higher income households benefiting at a faster pace than others. The Finance department also warned of foregone government revenue.
The government could only suspend excise taxes through new legislation amending the oil deregulation law.
John Paul R. Rivera, an economist at the Asian Institute of Management, said via Viber that the suspension of excise taxes would be beneficial to consumers. But he also noted that it puts at stake the revenues of a government that has racked up spending on pandemic responses.
“It’s a tradeoff. Government must weigh their priorities on this. Of course, consumer-side, this would be beneficial,” he said.
At the same time, farmers and fisherfolk said they would need fuel subsidies to meet their agriculture production targets as higher fuel costs hamper their operations.
Acting Presidential Spokesperson Karlo Alexei B. Nograles last week said the government appropriated P500 million from its 2022 national budget to provide fuel discounts for the agriculture sector.
“Fuel subsidies can help, but it will crowd out funds for our economic recovery and pandemic-related expenditures,” University of Asia and the Pacific Senior Economist Cid L. Terosa said in an e-mail.
Meanwhile, Bayan Muna party-list representatives renewed their push for the passage of House Bill (HB) No. 10386 or the Unbundling of Oil Prices Act, which seeks to make oil prices transparent.
“Unbundling of oil prices will be a mechanism to check the validity of the current condition of high and increasing prices of oil products such as diesel, liquefied petroleum gas, gasoline and others,” Bayan Muna Rep. Ferdinand R. Gaite said in a Viber message.
Bayan Muna Rep. Carlos Isagani T. Zarate said in a separate Viber message there is a need for oil companies to disclose the pricing information “so that we will know if they are overpricing or not.”
“For 20 years the consumers could have overpaid billions of pesos in overpriced fuel. Worse these also led to price increases of other products using fuel,” he said.
HB No. 10386 was filed on Oct. 14, 2021 and has been referred to the House Committee on Energy. — with Jaspearl Emerald G. Tan