Sen. Imee Marcos proposed a one-year suspension of the 12-percent VAT on oil and petroleum products, citing the crippling economic consequences of the Covid-19 pandemic.
On Tuesday, chairman of the Senate Committee on Economic Affairs, pointed out another round of price hikes by oil companies, noting per-liter increases of P1.15 for gasoline, P0.60 for diesel and P0.65 for kerosene.
Instead of another price increase, Marcos recommended an “oil price freeze,” citing the country’s ongoing financial difficulties as a result of the COVID-19 pandemic and recent natural disasters.
The senator recalled that fuel prices per liter have risen by P13 for gasoline, P10 for diesel, and P9 for kerosene since January. She claims that repealing the VAT on oil products will “provide timely relief to various consumers other than motorists.”
In a statement, Marcos recalled that the government imposed a 12-percent VAT on fuel products in addition to the excise tax under the Tax Reform for Acceleration and Inclusion (Republic Act 10963) law signed by President Duterte in December 2017, imposing excise taxes of P2.50 per liter of diesel and P7 per liter of gasoline.
“The Big Three oil companies appear to owe us a discount. “They have reduced diesel prices by less than 40% since January, even though the Middle East crude prices have dropped by more than 82 percent,” she noted.
“Oil price hikes have a domino effect on agricultural products and other essentials. The higher costs will be passed on to the ordinary consumer who may still not have a job but has no choice but to deal with rising prices of food, electricity, and other goods,” she added.
According to the Bangko Sentral ng Pilipinas (BSP), headline inflation in June slowed to 4.1 percent year on year from 4.5 percent the previous month and “was within the BSP’s monthly forecast range of 3.9-4.7 percent for the month.”
And as per the BSP’s Investor Relations Office, the June deceleration in inflation was caused by “slower price increases for non-food items.”
“Non-food inflation was primarily pulled down by a slowdown in transport inflation, which was caused in part by base effects resulting from the significant price increase in the previous year caused by the higher tricycle fare,” the BSP IRO stated last July 6.
Meanwhile, food inflation remained stable in June, with meat inflation easing due to increased supply from pork imports, while rice inflation fell further, offsetting higher year-on-year inflation for fish.
