THE country‘s oldest business organization wants the government to study variations on fuel tax cuts as a way of helping the public cope with the oil shock without hurting government finances.
On April 16, President Ferdinand Marcos Jr. approved a three-month suspension of excise taxes on liquefied petroleum gas (LPG) and kerosene, but not on fuel and value-added tax (VAT).
The Department of Finance had estimated that scrapping fuel excise taxes could cost the government P136 billion. It said that VAT revenues are also needed to fund aid for sectors hit hard by the energy crisis.
“The government must look at the total [picture]. Where does the fuel tax go? This needs to be studied. [Cutting the excise tax on fuel] doesn‘t have to be 100 percent. It can be 50 percent ... The idea is to make it easier for people to afford the increase in oil prices,” Chamber of Commerce of the Philippine Islands (CCPI) president Jose Luis Yulo told The Manila Times at the 140-year-old group‘s Economic Compass Pillars 5 conference on Saturday.
On the same day, Marcos announced another rollback in fuel prices effective Tuesday, following weeks of consecutive increases due to the Iran war, where hostilities have temporarily halted with a ceasefire.
Marcos said the cost of diesel would drop by at least P24.94 per liter, gasoline by P3.41 per liter, and kerosene by P2 per liter.
Yulo also called for the reactivation of the defunct Oil Price Stabilization Fund (OPSF), which had been created in 1984 to reimburse companies for additional costs of importing crude oil when global prices rose or the peso weakened. And when prices fall, oil companies were required to pay into the fund, rather than immediately lowering retail prices, allowing the fund to accumulate for future spikes.
Abolishing the fund in 1996 was a mistake, Yulo said, noting that the OPSF would have served its purpose today.
“It was removed because of the concept of free trade, which the government did not understand. It should be brought back,” Yulo noted.
Recently Manila 3rd District Rep. Joel Chua filed House Bill 8839, or the proposed “Fuel Price Stabilization and Energy Security Act,” seeking to establish a Fuel Regulatory Board, create a new Oil Price Stabilization Fund, and build a strategic fuel reserve as part of a broader effort to give the government a working set of tools during fuel emergencies.
The bill proposes a five-member Fuel Regulatory Board composed of a chairman, two experts in energy economics, petroleum engineering, or energy policy, one consumer sector representative, and a transport sector representative.
Under the measure, the board is empowered to regulate fuel prices, impose temporary price bands or price ceilings, and investigate and curb anti-competitive practices in the industry.
The bill also reestablishes an Oil Price Stabilization Fund to soften the immediate impact of global oil shocks on domestic pump prices without reviving the defects of the old OPSF.
Chua said that if world oil prices suddenly surge and gasoline or diesel prices are projected to rise by P5 per liter, the government can use the OPSF to soften the blow.
