EDITORIAL - Inflationary

All surveys have consistently shown inflation as the top concern of Filipinos, and President Marcos getting the lowest marks in tackling the problem.

Those marks could worsen along with the inflation rate, which surged to 7.2 percent in April. This was the highest inflation print since the 7.6 percent recorded in March 2023, when prices of food – notably onions, rice and sugar – were skyrocketing.

Food prices ranked second to transport costs as the biggest factors in the latest acceleration of the inflation rate. These were due to the huge leaps in fuel prices as the Middle East crisis erupted.

As business groups have pointed out, logistics costs account for a substantial chunk of their expenses. The price of diesel in particular has a heavy impact, being the fuel for many delivery vans and trucks as well as mass transport vehicles.

Since the Iran war began in late February, diesel prices have tripled at the pumps. Several business leaders have joined public utility vehicle drivers and operators in calling for a reduction, suspension or even outright scrapping not only of the excise tax on fuel but also the hefty 12 percent expanded value-added tax.

The Department of Energy, for its part, has said it is amenable to a reduction or suspension of the VAT on electricity – another major component in business expenditures.

The business leaders pointed out that 96 percent of enterprises in the country are either micro or small, which are heavily impacted by the unprecedented jump in the prices of diesel, gasoline and cooking gas.

Logistics costs, the business leaders stressed, are passed on to consumers and inevitably fuel inflation. Cash dole-outs or ayuda to the masses are quickly lost to higher commodity prices. The latest inflation print is higher for the bottom 30 percent of Filipino households, at 8.5 percent.

High diesel prices are also posing risks to the country’s fish supply as fishermen minimize their trips or stop putting out to sea due to the prohibitive cost of diesel, the fuel for fishing boats.

The fuel crisis has given the government billions of pesos in windfall taxes, which aren’t factored into the revenue sources for the 2026 national budget. The higher the prices of fuel, the greater the windfall.

With the unresolved scandal involving the systematic thievery of public funds through acrobatics in the national budget process, it’s tough to sell the need to hold on to windfall taxes during a national crisis. Where will the taxes go?

The windfall is being reaped on the back of public suffering. And the government refuses to ease the misery.