Unless government removes the 12 percent value added tax (VAT) on oil and repeal the Oil Deregulation Law, the country is facing as much as P50 per liter in gasoline prices and more than P700 in LPG retail prices by the end of the year, umbrella group Bagong Alyansang Makabayan (Bayan) disclosed.
Simulations of the monthly price movement of petroleum products since the oil industry was deregulated in 1996 show that by the fourth quarter of 2008, pump prices of regular gasoline could reach P46 to P50 per liter; diesel, P43 to P46; and LPG, P669 to P708 per 11-kg cylinder tank. Overall, the average retail prices of all petroleum products could jump by as much as P9 per liter.
Bayan warned that a basis for these sharp increases can be traced to intense speculation in the oil industry, saying that it is in the interest of the oil monopolies that prices go up.
With these expected increases in the coming months, the Arroyo regimes oil tariff cut is not only a token measure but a grave insult to the people who are forced to survive increasing prices with meager incomes and wages, Bayan said. Worse, VAT collections from oil and other products do not return to the people in the form of social services but are used to pay for foreign loans and lost to corruption.
The umbrella group argued that continuing the collection of VAT and allowing oil companies to hike pump prices at whim amid an oil price crisis further underscore the anti-people and pro-market character of the Arroyo regime and further isolate it from the people.
In a news briefing, Bayan outlined its short term and medium term alternatives to include:
1. the removal of the VAT on oil
2. the review and repeal of the Oil Deregulation Law
3. the establishment of mechanisms for the centralized procurement of oil
4. the establishment of a buffer fund and buffer supply to cushion the impact of world prices
5. the return to public hearings to determine oil price increases.
The group said that these alternatives are far more beneficial to the public than the ones outlined by the governments energy summit. ###
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