By Lenie Lectura
Butch Fernandez & Bernadette D. Nicolas - May 28, 2018
LOCAL pump prices are on the rise
for the third consecutive week, amid a warning by finance officials that
hastily suspending the Tax Reform for Acceleration and Inclusion (TRAIN) law,
which imposed higher fuel excise taxes, would do more harm than good.
Lawmakers, meanwhile, are treading a
cautious path, amid rising calls to halt Package 1 of the Comprehensive Tax
Reform Program (CTRP) on which the government anchored bulk of its ambitious
development goals.
Senators said they will await action
by the House of Representatives on calls to suspend TRAIN’s implementation even
as Congress is supposed to start tackling already Package 2. The second phase
of the CTRP cuts corporate income taxes and rationalizes the system for fiscal
incentives.
Another round of price hikes
On Monday Phoenix Petroleum and PTT
Philippines said they will increase the price of gasoline products by P0.65 per
liter, and diesel by P0.35 per liter.
Pilipinas Shell announced the same
price increase for gas and diesel. On kerosene, it will sell it higher by P0.45
per liter.
Eastern Petroleum priced its
gasoline products P0.60 per liter higher; and diesel by P0.30 per liter.
They will all implement their respective
price adjustments at 6 a.m. of Tuesday, May 29.
Other oil firms are expected to
follow suit.
On May 22 gasoline prices increased
by P1.60 per liter and diesel by P1.15 per liter. They also implemented a price
hike on May 15 for gasoline by P1.10 per liter and diesel by P1.20 per liter.
The Department of Energy
(DOE) cited world events affecting local pump prices. These
include the US announcement on possible sanction on Iran; Venezuela crude
production dropping from 2.3 million barrels per day (b/d) to 1.5 b/d due to
the economic and political crisis, latest of which is the controversial
presidential election; and the Organization of the Petroleum Exporting
Countries’ (Opec) deepening supply cut led by Saudi Arabia, which wanted to
increase the price of crude to at least $80 per barrel to balance its budget.
US oil importers were advised to
look for alternative supply of oil to replace that coming from Iran, which owns
12 percent of the Opec supply amounting to 32 million barrels per year.
To provide relief to motorists,
Phoenix Petroleum said on Monday it will provide a P2-per-liter
discount on diesel and a P5-per-liter discount on its premium gasoline variants
in select stations for two days.
In Metro Manila 20 Phoenix service
stations will provide the price discounts on May 29 and 30.
Phoenix stations in North and South
Luzon will, likewise, implement the discount on June 2 and 3; and 18 of
its sites in the Visayas will carry the discounts on June 5 and 6.
The oil firm has yet to schedule a
similar price discount in Mindanao.
“There is no minimum spend
requirement. The price discount is available for cash and credit-card
transactions. PO and bulk transaction are not included,” it added.
Mitigation measures
In a recent meeting with the
Department of Energy (DOE), oil companies expressed willingness to give
discounts and widen their CSR programs to support the transport sector and the
marginalized.
The DOE and the Department of
Finance (DOF) are eyeing new measures on the excise tax and value-added tax on
oil as a result of TRAIN’s implementation.
The DOE will also be working with
the Department of Transportation for the swift implementation of Section 82 of
the TRAIN law on fuel vouchers for public-utility vehicles, and pursue the
department’s efforts to expedite the unbundling of fuel prices.
Based on International Energy Agency
(IEA) reports and Mean of Platts Singapore (MOPS) trends, oil supply and demand
in the short and medium term is expected to reach $80 per barrel.
DOF’s warning
Amid the clamor to suspend excise
taxes on fuel, DOF Assistant Secretary Paola A. Alvarez said doing this
mid-year will leave the government hard-pressed to fund its programs.
When Dubai crude price reaches an
average of $80 per barrel for three months, what will be suspended, according
to a provision under TRAIN, is the next tranche of the scheduled increase
in excise tax on fuel, Alvarez noted.
“What is crucial here is we cannot
suspend it because of the funding that we need, especially for free education
in state universities and colleges, salary increases of government personnel
and teachers. We will be having a hard time funding those plans if we suspend
those provisions,” she said.
Section 5 of Revenue
Regulation 2-2018, which provides implementing guidelines for petroleum
products under TRAIN, states that: “For the period covering 2018 to 2020, the
scheduled increase in the excise tax on fuel as imposed, shall be suspended
when the average Dubai crude based on Mean of Platts Singapore (MOPS) for three
months prior to the scheduled increase of the month reaches or exceeds eighty
dollars [$80] per barrel.”
Sen. Grace Poe and other senators
had called last Friday to recommend the suspension of excise taxes on
fuel with the steady rise in petroleum product prices.
Alvarez said they are also looking
forward to the meeting of the Organization of the Petroleum Exporting Countries
(Opec) with Russia, seeing this as helping the country if Russia increases its
oil production.
According to Alvarez, “one of the
reasons the prices of oil is increasing” is the “shortage of supply, so if they
plan to increase the output, it would have a better impact because it will
lower the inflation rate, [and] because of the increase in oil supply, its price
will lower in the market. In the long run, we don’t think [the prices] would
reach $80 per barrel because they will be producing more oil.”
Presidential Spokesman Harry L.
Roque Jr. said earlier the DOE is eyeing to get cheaper oil from Russia, a
non-Opec country.
Catch the profiteers
Aside from this, the President also
ordered the Department of Trade and Industry to catch the profiteers or
businesses, which ignore the suggested retail price; and the Department of
Labor and Employment to convene regional wage boards to check if minimum wages
should be increased.
These three measures, Roque said,
are meant to mitigate the effects of TRAIN and the weakening peso.
Alvarez said, meanwhile, the passage
of the national ID system will hasten implementation of conditional- and
unconditional-cash transfers, as it would be easier to pinpoint the
beneficiaries.
Senate awaits House action
Relatedly, Senate President Vicente
C. Sotto III said Monday senators will await House action on the
proposed suspension of the TRAIN before tackling the counterpart remedial
legislation in the Senate.
The chamber will abide by the rule
that all legislation pertaining to money measures must emanate from the House
of Representatives, he said.
Sotto, in a text message to the
BusinessMirror, pointed out that the proposal to suspend the TRAIN law came
from congressmen in last week’s plenary deliberations, as reported over the
weekend.
The Senate leader made the
clarification when asked on Monday if the Senate would back the House proposal
to suspend TRAIN revenue impositions.
“Tax measures come from the
House, so we leave it to their discretion first,” Sotto III added.
Concerned congressmen last week
aired the proposal to suspend the TRAIN law’s higher tax impositions amid
spiralling prices of basic commodities.
House Committee on Ways and Means
Chairman Rep. Dakila Carlo E. Cua signalled support over the weekend for
calls to consider suspension of TRAIN tax measures to check price hikes.
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