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Finance Secretary Margarito Teves admitted Friday that a government
decision to waive import tariffs on crude oil will do little to cut
record-high pump prices.
President Gloria Arroyo’s government came in
for criticism from all sides a day after announcing it will scrap
the remaining 1-percent tariff on crude oil, which had been
gradually cut from 3 percent in February to help cushion the impact
of record-high crude oil prices.
“We would have had windfall revenues due to
rising oil prices, but [the effect of the tariff removal] is
revenue-neutral,” Teves told reporters.
He added the tariff cut will likely have no
effect on pump prices since the rates charged by oil firms did not
reflect the increased import costs as crude prices soared to more
than $130 a barrel.
“Prices are rising. We cannot do anything
about that,” Teves said.
He added that government officials are
discussing a proposed subsidy to the public-transport system, “but
there have been no decisions made.”
Sen. Manuel Roxas 2nd also on Friday urged the
government to go beyond “tokenism” and waive a 12-percent sales
tax on petroleum products, a proposal that the government previously
resisted.
The Manila-based left-wing think-tank IBON
Foundation claimed that removing the sales tax, or expanded value
added tax (E-VAT), “will immediately bring down pump prices by as
much as P5 [11.63 US cents] per liter and directly relieve
consumers, unlike the oil-tariff cut that only relieves oil
companies from paying import duties.”
It said local pump prices rose by about P7.50 a
liter after the oil tariff was cut to 2 percent in February and then
to 1 percent earlier this month.
Teves said there will be “winners and
losers” in the depreciation of the peso to about P43 to the dollar
from P40 to the greenback earlier this year.
“Now that the peso has deteriorated from
almost 40 to 43 now, this will help our exporters and overseas
Filipino workers, but the government will have to pay more in
interest rates,” he added.
Teves said it was “still too early to say”
what the impact would be on the gross domestic product and
government revenues.
The rate of depreciation was still “within”
the government forecast of between P42 and P45 to the dollar for
this year, he added.
The Bureau of Customs also on Friday said the
oil-tariff cut would have no negative effect on its
revenue-collection efforts.
But, Customs Commissioner Napoleon Morales
warned, removing the expanded value added tax on oil imports will be
far more disastrous to the government’s revenue generation.
“Our economic managers have assured that the
12 percent [E-VAT] will be enough to compensate for the loss of the
tariff, so I am not alarmed by the situation,” Morales said.
He added that cutting the E-VAT on oil imports
will be much more complicated and have more adverse impact on the
bureau, since oil accounts for 70 percent of the country’s
imports.
Morales said scrapping the tariff would still
translate to P11 billion in lost revenue for the government.
-- AFP, Angelo S. Samonte and Anthony Vargas
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