Pump prices are on the rise once again this week.
The price of gasoline is going up by P0.50 per liter, diesel prices will increase by P1.65 per liter, and a P0.10 per liter hike in kerosene takes effect.
The price adjustment starts Tuesday morning for Shell, Petron, Caltex, Seaoil, PTT, Phoenix, Cleanfuel. Other oil firms are expected to implement the same price increase.
This is the fifth consecutive week of oil price increase for all petroleum products.
Last week, gasoline prices went up by P0.80 per liter, diesel by P3.1 per liter, and kerosene by P1.7 per liter. These resulted to the year-to-date adjustments to stand at a net increase of P29.50/liter for gasoline, P44.25/liter for diesel and P39.65/liter for kerosene.
Movements in the world oil market affect local pump prices. The upward price increase was supported by recovering demand in China on eased lockdowns and growing supply concerns over the European Union’s ban on Russian oil.
These movements in the world oil market affects local pump prices because the Philippines is importing more than 90 percent of its fuel requirements.
Moreover, the weakening of the peso against the US dollar also played a big role in determining fuel prices sold in the country.
On June 27, the local currency finished trading at P54.83 against the US dollar. The Department of Energy (DOE) explained that a weak peso is one of the factors that determine local pump prices. The DOE has been pushing for the unbundling of petrol prices. However, the implementation of the unbundling policy was stopped by the local courts.
SEN. Panfilo Lacson is batting for a “breathing room for the public amid skyrocketing fuel prices.”
In a news statement issued on Monday, Lacson cited a looming conditional suspension of the excise tax on fuel, and the scrapping of several lines of exemption in value-added tax (VAT).
The senator suggested that “this is the two-pronged formula that can give Filipinos some badly needed breathing room” from the effects of prohibitive fuel prices.
“We can conditionally suspend excise taxes on fuel when oil prices reach a threshold price in the international market such as $90 or even $100 per barrel,” Lacson said, adding this could “provide some breathing space not just for the transport sector but those affected by high fuel prices.”
Interviewed over the weekend, the senator suggested that the government consider cutting the “lines of exemptions in the value-added tax as the Philippines is known to be the only country in Southeast Asia with more than 100 lines of VAT exemptions.”
“We could have earned at least P117 billion in additional tax revenues in 2018 alone, even with a reduced VAT rate from 12 percent to 10 percent, by removing 78 lines of exemption from some sectors such as the power sector, cooperatives, housing, and economic zones,” Lacson pointed out.
He rued that these VAT exemptions have been there for so long suggesting, “It is about time to review these lines of exemptions and reduce the number of exemptions.”
Lacson suggested “this would be better than proposals to give subsidies to poor and middle-income households—a measure that may strain the budget.”
At the same time, he noted that “a big chunk of the budget” already goes to social welfare programs like 4Ps as well as subsidies for agriculture, micro, small and medium enterprises.
“The budget may not be enough for these,” the senator added.
With Butch Fernandez
Image credits: Nonoy Lacza