D0f should not feel disadvantaged by the suspension of excise taxes

2018-10-17 00:00:00

Laban Konsyumer says government should not feel disadvantaged by the suspension of 2nd tranche of fuel excise taxes
Group calls on government to stop discussing foregone revenues, as this is a way to tame inflation and is a victory for consumers
Laban Konsyumer Inc. President Atty. Victorio Mario A. Dimagiba, today (October 16) expressed approval of the government?s decision to suspend the second tranche of fuel excise taxes. A move, he said, will somehow help tame inflation. Dimagiba said ?this is welcome news and a victory for Filipino consumers who are now suffering the effects of runaway inflation. ?Government should not focus on what they claim will be lost, but rather should focus on the benefit this will provide ordinary consumers as the heavy burden of high prices will be tempered and they will somehow be relieved of what they are paying for.?
Dimagiba said, ?The country?s economic managers should not feel ?disadvantaged? by the suspension. Even without this, government collections from the VAT on diesel and gasoline has already increased by 35 percent and 21 percent respectively. This is equivalent to P1.26/ liter and P1/liter, respectively. So, it?s not like the government is giving up a lot through the suspension. They are already collecting more today and the suspension isn?t until January 2019.?
Dimagiba added that ?while consumers have been hurting from higher fuel prices, the government has actually financially benefitted from the higher fuel prices. We also want to address the Department of Finance?s concern about foregone revenues. It will not be as large as they say, as the suspension next year is already being offset by the higher VAT today.?
?If you look at the numbers, government is also collecting additional Malampaya proceeds, as Malampaya prices not only move with world crude oil prices, but are also dollar-denominated AND are imposed a 12 percent VAT,? said the LKI President.
Dimagiba continued by explaining that ?while consumers are asked to bear the record high inflation today, the government has been financially benefitting from the higher fuel prices and the peso depreciation. Government should not scare Filipinos about their foregone revenues next year. Their mindset should be on what they can still do to alleviate the negative effects of inflation and soaring prices from the burden and shoulders of the Filipino consumers. This is what the government should be doing, more acting on consumers? behalf and less complaining about foregone revenues, as consumer welfare is of utmost priority.?
LKI explained that while Dominguez said VAT increase due to high oil prices in an interview and Karl Chua estimated the foregone revenues from the suspension to be around P41 billion, but they also say that they have not yet calculated the net revenues (net of increase VAT collections). In pesos total on how much the windfall VAT, we cannot focus on Dominguez proclaiming that 41B pesos will be lost because of the suspension. Using DOE data from the first half 2017, the country consumes around 40 million billions of barrels per year ( bbls ) of gasoline and 70 million bbls of diesel per year. At increased VAT of P1/liter for gasoline and P1.2/liter for diesel, that would be equivalent to additional collections of around P19 billion per year.
Attention should be brought to consumer benefits and protecting consumer welfare and not the alleged foregone revenues.?
Dimagiba continued by pointing out that ?to put things into perspective, in terms of how much more did we grow in consumption year to date, it is at 159 liters per barrel. It shows the Philippines uses 462,000 barrels of petroleum products per day, 23.4% of this is gasoline and 42% is diesel. So, 23.4% x 365 days x 462,000 barrels a day x 159li/barrel= 6.3 billion liters of gasoline per year. and 42% x 365 days x 462,000 barrels/day x 159li/barrel=11.3 billion liters of diesel per year. These calculations will give more clarity about the impact and value of the government suspending the 2nd tranche of fuel excise taxes. Based on the news and the quoted tweet of Sec. Pernia, suspension is only on the oil excise taxes.?
Laban Konsyumer Inc. (LKI) is a nonprofit and non-stock registered entity with the Securities and Exchange Commission. LKI is a consumer advocacy group in the Philippines that promotes consumer education and protection against deceptive, unfair and unconscionable business practices. The LKI focuses on education, prices and supply of basic and prime commodities, standards and qualities among other areas of consumer protection.
LKI is a new member of Consumers International, a membership organization for consumer groups around the world. Consumer International is composed of over 200 member organizations in more than 100 countries to empower and champion the rights of consumers everywhere. Dimagiba also acts as Chairman of the International Organization for Standardization (ISO) Consumer Policy Committee (COPOLCO) of the Philippines.
For any inquiries or concerns, you may reach LKI President Vic Dimagiba at 0917-812-5546

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