LKI President Victor Mario Dimagiba
As of this writing, the cost of Dubai crude oil averages US$81 per barrel. The country is a net importer and buyer of petroleum products. The records show that the year to date increases in the retail prices of gasoline stand at P17.85 per liter, diesel at P16.50 per liter and kerosene at P14.15 per liter ,inclusive of the 12% Value Added Tax.
What relief can governmentprovide as consumers feel the effect of rising fuel prices on costs of goods and services?
These measures can be considered:
First, the government, using the extraordinary powers prescribed in Presidential Proclamation No 1218 can suspend the collection of the excise taxes on petroleum products for a limited period of 2 weeks, renewable until the crude oil prices ease.
With this move, all consumers will save the amount of P10.00 for gasoline, P6.00 for diesel and kerosene and P3.00 per kilo on an 11-kg LPG cylinder, exclusive of the 12% VAT. The suspension of the excise taxes on petroleum products translate to approximately 50% savings on the retail price for gasoline and 30% savings for diesel and kerosene. This renders the clamor for a fare hike from the transport sector unnecessary. Likewise, the suspension will mitigate the unavoidable pass on of fuel prices to the costs of goods and services to all sectors.
The excise taxes are based on the implementation of the Tax Reform for Acceleration and Inclusion Act (TRAIN) which mandated increasing excise tax rates from 2018 to 2020. Laban Konsyumer Inc. (LKI) sought to void the TRAIN Act by filing a petition in the Supreme Court in 2018. LKI argued that the TRAIN Law violated the fundamental law that tax laws should be equitable and progressive. This petition is yet to be decided by the Court.
The suspension of the collection of the excise taxes on fuels is an interim relief that benefits all sectors and consumers. The proposal is for a limited period of 2 weeks and renewable for such period as needed and until the crude oil market prices eases.
Our proposal will immediately benefit the priority sector, the transport drivers. We do not agree that the solution is a fare hike, because a fare hike has a domino effect and can be counterproductive in the effort to mitigate or cushion the consumer feeling the pinch and impact of rising oil prices.
Second, to complement the savings that will arise from suspending the collection of the excise taxes on fuels, is the reimposition of price freeze on basic necessities and prime commodities.
Using PresidentialProclamation No. 1218 as well as the rising oil prices as justifications, the National Price Coordinating Council should:
1. Suspend the implementation of the increases in the Suggested Retail Prices of basic necessities and prime commodities published on August 29, 2021 by the Department of Trade and Industry.
2. Issue the Maximum Drug Retail Price Part 2 on additional list of medicines that will enjoy hefty price reduction.
I received an email from the Department of Health that the proposed Executive Order as a continuation of Executive Order 104 is under review in the of the Office of the President.
3. Impose price freeze or price ceiling on basic necessities and prime commodities such as rice, local and imported, regular, well milled, commercial and premium ; liempo and kasim, local and imported; sugar ; chicken , off size, regular size , prime size , vegetables, upland and lowland and marine products .
This recommendation of LKI has already been sent to the Office of the Secretary of Agriculture by the Price Council and is awaiting the Secretary’s action.
In this connection, I believe that the price of rice that hovers at P 38.00 per kilo, whether imported or local rice, should be immediately addressed.
However, I have read news report said that the Secretary of Agriculture will not impose a price cap or SRP for rice.
Third, LKI proposes that government should conduct tax investigation and audit whether oil companies, traders and importers are assessed and paying correct income tax for the windfall profits for the year. There is an existing government regulation on the number of days of inventory of oil products for security considerations. The year to date increases indicates that the oil companies are buying cheaper products at lower prices but sells at higher prices.
Consumers should know that the oil retail sectors are paying the correct amount of income tax.
Atty. Vic Dimagiba, President of Laban Konsyumer Inc.
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