Ibon to DOE: Relieve Consumers, Not Oil Firms

Independent think-tank IBON Foundation criticizes the Department of Energy and Malacañang for passing the zero oil tariff cut, saying that reduced tariffs in the last three months has resulted in even higher prices of oil products.

Since the oil tariff was reduced from 3% to 2% in February and 2% to 1% in May, gasoline and diesel prices have increased 11 times to a total of P7.50 per liter. There were two rollbacks of P1.50 per liter for diesel and P1.00 for gasoline presumably brought about by the tariff cut. But since then, pump prices have actually increased by a net of P6 per liter.

The DOE announced yesterday that starting June, imported oil products will enjoy zero tariff cut. It admitted though that the scrapping of oil tariffs would result only in a reduction of P0.50 per liter in pump prices. But local oil firms recently announced that they are looking at a P1.50 per liter increase in diesel prices and P1.00 per liter for gasoline following news world oil prices had hit US$135 per barrel, debunking government argument that the oil tariff cut will bring down oil prices.

Moreover, by choosing to remove tariffs on oil imports, government protects the interests of the oil firms at the expense of potential revenues that should be used to fund vital social services.

IBON maintains that the removal of the VAT on oil is still a more effective solution to the high oil prices. Removing the VAT on oil will immediately bring down pump prices by as much as P5 per liter and directly relieve the consumers, unlike the oil tariff cut that only relieves oil companies from paying import duties.

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