Philippines: Independent Oil Companies Call for VAT Reduction
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Tuesday, 09 September 2008 |
 Fernando Martinez, Independent Philippine Petroleum Corp. chairman, said on the sidelines of an industry meeting Monday. “We can roll back prices by P8 per liter for gasoline and P4 per liter for diesel but they have to remove VAT on oil.”
Martinez, who also heads Eastern Petroleum Corp., said this in reaction to pronouncements from National Economic and Development Authority Director General Ralph Recto that oil firms should impose a one-time cut in fuel prices to lower the country’s soaring inflation.
But Martinez said that if this is the case, then Recto, principal author of the VAT law in the Senate, should be supportive in lowering prices by removing the tax on oil, which constitutes around 20 percent of fuel prices.
“If the argument is that fuel prices contribute to inflation then we should just leave VAT collections in the pockets of consumers to increase their disposable income. They may even be more efficient on where they would spend this,” he added.
Martinez said the oil firms have already cut fuel prices by P6.50 per liter for gasoline and P5.00 per liter for diesel as of last week and it is high time that the government do its part.
Ed Chua, Pilipinas Shell Petroleum Corp. country chairman, said that pronouncements of one-time adjustments, be it from government officials of from oil firms themselves, would only raise public’s expectations and not solve anything.
“Transparency and moderation are not the same,” he said, adding that if oil firms’ adjustments should be tempered when prices are increasing, then it should also be so when there are rollbacks.
He said that there should be consistency in price movements, whether it be “daily, weekly or monthly,” to help the public transport sector cope with any adjustments.
As to any impending adjustments in pump prices, however, oil company officials present at the meeting were mum if there were any forthcoming.
But last week Unioil Petroleum Philippines Inc. General Manager Chito Medina-Cue Jr. said if prices of oil in the international market will continue their downward spiral, then the public can expect another price rollback.
“We are planning another rollback next week depending on the market forces. There will be a possible P1 to P2 per liter reduction,” he said.
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