Non-OPEC states eyed as source; more protests set
MANILA, Philippines — As rising global crude costs continue to impact on local prices, the Philippines might consider importing cheaper petroleum products from non-OPEC oil producers like the United States and Russia, Malacañang said yesterday.
Countries under OPEC or the Organization of Petroleum Exporting Countries are the Philippines’ traditional sources of fuel.
Presidential spokesman Harry Roque raised the scenario as militant groups vowed to launch more protest actions against the Tax Reform for Acceleration and Inclusion (TRAIN) law that is widely blamed for the surging prices of basic goods, including fuel.
Concerns over the likely loss of some of Iran’s oil exports due to US sanctions as well as Venezuela’s plummeting production have sharply pushed up oil prices in the world market.
“Now when it comes to oil, we’re doing something about it. In fact yesterday I learned from some people in government that we’re planning to import cheaper oil from non-OPEC members like Russia and the United States,” Roque said in Filipino.
He stressed the surge in oil prices was beyond the government’s control. The 12 members of OPEC are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.
He also parried criticisms against the Duterte administration for its implementation of the TRAIN law.
“Let us see if the hike will stop since it is summer already. But, whatever the world prices will be, we have a built-in mechanism, such as once the prices of oil reach $80 a barrel,” he said, citing a provision in the controversial law.
Roque explained that the government will still collect the excise taxes provided for under the law.
What could be suspended is the imposition of additional excise taxes under the TRAIN law, he added.
Roque maintained the government may only temporarily suspend the collection of excise taxes on crude oil covered under the TRAIN law if the global prices reach $80/barrel.
He emphasized the TRAIN law is not to blame for the soaring fuel prices.
“We can’t deny the prices of goods have sharply gone up, largely due to the sharp rise in global oil price. It’s beyond our control,” Roque pointed out.
He also said a majority of Filipinos have higher take-home pay due to lower income tax provided for under the TRAIN law.
But as the government tries to assuage public fears of further hikes in the prices of basic goods and even transport fares, militant party-list groups vowed to launch more protest actions against the TRAIN law.
“We are protesting this unjust new tax measure because it is slowly killing our people with high prices of goods and services. We will continue to go out in the streets to shout in protest so the Duterte government could hear the sentiments of the poor,” Rep. Ariel Casilao of Anakpawis said yesterday.
He said some of the protest actions would be done right at the House of Representatives and the Senate “to compel Congress to junk the TRAIN law.”
He said several consumer groups, including Samahan at Ugnayan ng mga Konsyumer para sa Ikauunlad ng Bayan (SUKI), would join the protests.
Casilao belongs to the Makabayan bloc of seven leftist party-list representatives who have filed Bill 7653, which effectively seeks the repeal of the TRAIN law by proposing the deletion of all provisions that imposed new and higher taxes.
He said prices of diesel, gasoline and other oil products have gone up significantly in part due to the new and higher levies imposed under TRAIN.
“The government and the oil companies are getting windfalls in terms of profits and returns in just five months since the law took effect at the expense of the public,” he said.
People worst hit
He said it is the people who suffer since “petroleum products are widely used for electricity and transportation as well as for producing and processing a wide array of goods and services.”
Oil price hikes “have always had ripple effects on families’ basic needs,” he stressed.
Casilao noted that the Bureau of Internal Revenue has reported an additional collection of P12.5 billion in the first three months of this year due to the TRAIN law.
That amount was mostly contributed by the poor, workers and middle-income groups, he said.
Quirino Rep. Dakila Cua, who chairs the House committee on ways and means, has said he is open to reviewing the law.
But he is against the proposal to suspend it while a review is ongoing.
“Suspending it will affect the national coffers, and that is not a responsible thing to do,” he said.
For another lawmaker who is also an economist, more pressures on inflation are expected.
“Higher inflation could be up the road because of the rising cost of crude oil and the depreciation of the peso,” Rep. Michael Romero of party-list group 1-Pacman said yesterday.
“Crude oil prices in the world market seem to be heading toward $100 per barrel again. We’ve all been there before in 2011 to 2013. While that develops, another rising trend line has emerged, and this is the continuing depreciation of the peso against the US dollar,” he said.
He warned these conditions would cause the prices of products and services to go up further.
Romero noted that the Bangko Sentral ng Pilipinas (BSP) recently tried to control inflation by increasing borrowing rates.
However, he said the BSP still warned the public that more inflationary pressures could emanate from “possible adjustments in transport fares, utility rates and wages.”
“Considering these developments, we ask the administration’s economic managers to update Congress on its strategies and tactics for heading off inflation over the next 12 to 18 months,” he said.
The lawmaker said he would like to hear particularly from the Department of Social Welfare and Development, Department of Health, Department of Education, Commission on Higher Education, and Technical Education and Skills Development Authority their plans for helping cushion the impact of steadily rising consumer prices.
A large part of the increase in diesel and other oil products is due to rising prices of crude oil in the world market.
Only last Tuesday, higher crude cost caused local prices to increase by P1.60 per liter for gasoline and P1 for diesel.
False hopes
Rep. Antonio Tinio of Alliance of Concerned Teachers said Malacañang is raising false hopes on the suspension of excise taxes on diesel and other oil products imposed under TRAIN.
“President Duterte himself has declared he’s willing to suspend TRAIN. But the truth of the matter is that what the law allows to be suspended is the increase for 2019 and 2020,” he said.
He said the President’s spokesman contributed to the confusion when he told journalists that the administration was willing to suspend fuel taxes if the price of crude oil in the world market reaches $80 per barrel.
Tinio said Finance Secretary Carlos Dominguez III clarified Roque’s statement, saying what would be stopped is the scheduled increase for next year and 2020.
This means that the collection of excise taxes on oil products could not be scrapped, Tinio stressed.
“The total tax is P6 spread over three years. This year, the tax on diesel is P2.50. The declaration of the President and his spokesman does not mean that this would be suspended if crude cost goes up to $80 per barrel. So they are just giving the public false hopes,” he said.
He urged the House of Representatives to tackle the proposal of the Makabayan bloc, to which he belongs, to delete all provisions of the TRAIN law that impose new and higher taxes.
Aside from diesel, the law levied a P6 tax on cooking gas, kerosene and bunker fuel, which is used for electricity. This year’s first installment of the levy varies depending on the product.
In the case of cooking gas, it is P1 per kilogram. Thus, the levy on an 11-kilogram cylinder is P11, plus 12-percent value added tax.
Meanwhile, Senate President Vicente Sotto III said he would rather leave the matter of suspending the implementation of the excise tax on fuel to the economic managers.
Several calls have been made for Congress to act on the suspension of the increase in the excise tax on fuel, with Sen. Paolo Benigno Aquino IV even suggesting a rollback of pump prices to pre-TRAIN levels.
“I’ll leave it to the economic experts because they are the ones handling it. They are the ones seeing the figures, and (Finance) Secretary Dominguez is very optimistic because we are only seeing the increase in the price of this and that but we are not seeing the benefits (of TRAIN),” Sotto said.
“The economic experts will be in the best position to say that it should be suspended,” he added.
Senate President Pro Tempore Ralph Recto said the calls for a suspension of the increase in excise tax on fuel were unnecessary because the TRAIN has “a tax-freeze provision which shall kick in when the benchmark price of crude oil reaches $80 a barrel.”
“The tripwire is $80 per barrel, based on Dubai crude as reflected in MOPS,” Recto said.
“This is the circuit breaker in TRAIN. When oil touches this price, the excise tax increase on gas is suspended,” he added. – With Marvin Sy