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By Max V. De Leon, Reporter
(Last of two parts)
FOR want of more revenues to plug the ballooning
budget deficit, Malacañang is reportedly on the verge of
circumventing the law and reneging on the country’s multilateral
trade commitments as it tries to increase the tariff on petroleum
products under the Oil Deregulation Law (R.A. 8479) through an
executive order.
A Manila Times source said the Palace wants the
recommendation of the revived Economic Management Group to
increase the current 3-percent surcharge on imported crude oil and
refined petroleum products made effective immediately through the EO,
which is expected to be issued within this week.
The EO will amend Section 6 of R.A. 8479, which
states, “Any law to the contrary notwithstanding and starting with
the effectivity of this Act, a single and uniform tariff duty shall
be imposed and collected both on imported crude oil and [on]
imported refined petroleum products at the rate of 3 percent:
Provided, however, That the President of the Philippines may, in the
exercise of his powers, reduce such tariff rate when in his judgment
such reduction is warranted, pursuant to Republic Act 1937, as
amended, or the Tariff and Customs Code: Provided, further, That
beginning January 1, 2004, or upon implementation of the Uniform
Tariff Program under [the Philippines’ commitments to] the World
Trade Organization and Asean Free-Trade Area, the tariff rate shall
be automatically adjusted to the appropriate level notwithstanding
the provisions under this Section.”
With this, the Tariff Commission conducted a
public hearing on July 13 so it could immediately draft a working EO,
which was submitted to the government’s Tariff- Related Matters (TRM)
technical committee on July 15.
The source said the draft EO had been approved
and would now be sent to the TRM Cabinet level and the National
Economic and Development Authority Board for final approval before
it is signed by President Arroyo.
Concerned government agencies are doing all they
can to have the EO issued before Congress opens on July 26 because
the President is allowed under the Tariff and Customs Code to
introduce changes in the country’s tariff structure only when the
House of Representatives and Senate are on recess.
The working EO, the source said, was left with
blanks on the portion of the amount of the new tariff that would be
imposed on the imported crude oil and refined petroleum products to
give Malacañang a free hand in deciding on it.
He said that in accordance with the petition of
the Department of Energy, the government is looking at increasing
the oil levy to about 5 percent to 7 percent.
The target additional revenues to be generated
from the measure range from P4.48 billion to P14.8 billion a year.
It is one of the measures lined up by the EMG to
generate revenue in order to stop the budget deficit, which has
reached P77 billion since May, or only P2.5 billion short of the
government’s half-year target.
The source said, however, that the issuance of
the EO to amend portions of R.A. 8479 so as to increase the tariff
on some imported oil products is illegal. An EO cannot amend a
republic act. It has never been done before, the source noted.
He said the Department of Energy also erred in
using provisions of Section 6 of the Oil Deregulation Law in
justifying its petition to increase the oil surcharge.
The source noted that the provision specifies
only the reduction of the duty by the President and not the
increase.
He said anybody can question the legality of the
government’s action to raise the oil duty in court by filing a
petition for certiorari.
The source pointed out that this is why the
government had to ask the Department of Justice for an opinion on
the matter.
On Friday the department had yet to give its
comment, although the source said the Palace was likely to push
ahead with the signing of the EO without it.
Besides possibly violating the R.A. 8479, Malacañang
could also be reneging on the Philippines’ commitments to the
World Trade Organization and the Asean Free-Trade Agreement-Common
Effective Preferential Tariff (AFTA-CEPT) scheme.
Under AFTA, the tariff schedule of petroleum
products for countries in Southeast Asia should be at the level of 0
to 5 percent.
By going above 5 percent, the country is risking
retaliation from importing countries like Singapore, where some of
the new oil players get their shipments.
The Philippines is still negotiating with
Singapore on the compensation for the settlement of the two
countries’ petrochemical dispute when Manila decided to raise the
tariff on plastic products and resins above the CEPT-mandated level.
The Philippines can invoke Article 6 of AFTA,
which allows countries to raise their tariffs above the CEPT rates
as an emergency measure.
The provision, however, is process-driven,
needing much time for consultation, notification and hearing, which
obviously the government does not have.
The Philippines may not have a problem with the
WTO about the amount of the tariff that would be imposed on oil,
because the commodity was left unbound (no specific bound rate was
imposed) by the trade bloc.
Still, raising the tariff on oil would go
against the spirit of the multilateral trade agreements, which
always calls for the lowering until the total elimination of trade
barriers like tariff.
The source said Malacañang might peg the rate
of the most favored nation (MFN, or tariff imposed on imports
originating from outside of Asean) to 7 percent and 5 percent for
CEPT to avoid violating the AFTA provisions.
But again, the source said this could go against
the initial clause of Sec. 6 of R.A. 8479 which calls for a single
and uniform tariff duty for all the products mentioned.
The industrialist and oil-price watch advocate
Raul T. Concepcion said that should the government push on with the
EO, it must devise a mechanism that would make the rates flexible to
fluctuations in the prices of crude in the world market.
The government should impose a ceiling price so
that every time the value of oil goes above it, the tariff would
also go down correspondingly, Concepcion said.
This flexible tariff, he said, would ensure that
the consuming public and the government would share the burden of
huge increases of prices in the world market.
The Manila Times source said this mechanism was
not included in the approved draft EO, because it would only
complicate the system and give the Bureau of Customs a hard time in
its efforts to collect.
Fernando Martinez, spokesman for the country’s
new oil players, agreed that putting in place a flexible tariff rate
would be cumbersome. He said the government wants to raise the
tariff on oil because of its simplified nature.
This is like a prepaid tax, an advance ad
valorem. We have not taken hold of the products yet, but we have
already paid the taxes, Martinez said.
He said oil companies opposed the measure and
stressed that they would pass on to the consumers the effect of the
tariff hike. “In the end, we would just be collecting for the
government,” he said.
With this, Martinez said, he does not see any of
them questioning the legality of the EO in court.
In effect, he said, the public should not expect
any rollback even if the prices of crude in the world market went
down in late May to June.
Worse, the public should expect another round of
oil price increases when the EO becomes effective, especially now
that the value of crude is going up again.
As this situation unfolds, it is becoming
apparent that the gain of the government in additional revenues
would be another burden for the people.
Part 1 |
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