Arroyo bares cut in oil import tariff to cushion price hikes
But suspension of e-VAT rejected
By Joel Guinto
INQUIRER.net
First Posted 11:42:00 01/08/2008
Filed Under: Summit, Energy, Oil & Gas - Downstream activities
EDITOR’S NOTE: Reposting to correct error in definition of the cut in the oil import tariff as a one-percent reduction. The correct term should have been one-percentage point, not one percent. Our apologies.
MANILA, Philippines – (UPDATE 2) President Gloria Macapagal-Arroyo has announced a one-percentage point reduction in tariff rates for oil imports in to cushion the impact of rising oil prices.
But the President rejected suggestions to suspend the 12-percent
Expanded Value Added Tax (e-VAT) on fuel products, saying it could bloat the budget deficit.
The President also said that the government would ask the Energy Regulatory Commission (ERC) to expand the discount on "lifeline" electricity rates and other poverty alleviation measures.
Arroyo said she would issue an executive order on the tariff cut on Wednesday, adding that the reduction will be "revenue neutral."
Finance Secretary Gary Teves said the tariff rate would be reduced to two percent from three percent. He said the rate could be cut by another percentage point next week, once oil prices reach a certain threshold that would be set in the EO.
"We will bring down the tariff on oil and petroleum products. We ask the oil companies to use this to bring down diesel prices," Arroyo told a news conference in Malacañang after presiding over the National Economic Development Authority (NEDA) and National Anti-Poverty Commission (NAPC) clusters of the Cabinet.
"This is the quick response of the government to help our fellowmen and the Filipino family," she said.
If implemented across the board, Teves said the tariff cut would result in a P0.23 to P0.25 reduction in pump prices. But he also said the
President wanted the price cut to be concentrated on diesel.
"It [price reduction] could be higher, 50 centavos. If [tariff rates are cut by] two percentage points, it could be one peso. We will have to work it out," Teves said.
The finance chief said the tariff cut would take effect in two weeks.
When pressed by reporters, Arroyo said the e-VAT on oil would stay, and that this was not discussed in the Cabinet meeting.
"If you suspend the VAT, we will end up with a big budget deficit [and] high interest rate because of the budget deficit," she said.
The President's other directives following the Cabinet meeting are:
• Strengthening food production and distribution through the construction of farm-to-market roads and irrigation facilities, and setting up more "bagsakan" or drop off points for agricultural products and "Tindahan Natin," government stores offering prime commodities at discounted prices;
• Employing out-of-school youth at the Department of Public
Works Highways' (DPWH);
• Expanding the Technical Education and Skills Development Authority (TESDA) curriculum to respond to the demand for jobs in the Middle East;
• Expanding the call center and business process outsourcing (BPO) industry;
• Increasing microfinance lending;
• Opening more discounted pharmacies or "Botika ng Bayan" and "Botika ng Barangay" as well as distributing more PhilHealth cards.
Earlier on Tuesday, Arroyo said she would mobilize "growing" government resources to cushion the impact of soaring oil prices.
Arroyo issued the statement at the start of Cabinet meeting in Malacañang.
World oil prices have risen to $100 per barrel, prompting Arroyo to call for an energy summit at the end of the month.
"Gagamitin natin ngayon ang patuloy na lumalagong kita ng gobyerno upang bigyang tulong ang mga sektor na pinakamahirap sa pagtaas ng presyo ng langis at iba pang bilihin [Now, we will use growing government earnings to help sectors that are hardest hit by the rising price of oil and other commodities]," Arroyo said.
"This will be part of the agenda of the energy summit, which will be discussed in the meeting of the NAPC [National Anti-Poverty
Commission] and NEDA [National Economic Development Authority] Cabinet groups," she said.
Arroyo said more funding would be allocated for rural development, and to "uplift" the lives of farmers, fishermen, and other workers in the agriculture sector.
Despite the surge in oil, prices, Arroyo said the outlook on the economy remained positive, with the country topping the survey of international auditing firm Grant Thornton for the third straight year.
The President also cited a Social Weather Stations (SWS) survey, which said that 91 percent of Filipinos entered the New Year with hope.
"Sa gitna ng tumataas na presyo ng langis maganda pa din ang takbo ng ekonomiya sa pagtatapos ng kapaskuhan [Amid rising oil prices, the economy is doing good at the end of the Christmas Season]," she said.
"Our economy has reached a new level of maturity and stability, thanks to our reform measures, now we will translate the positive benefits of our reforms to real benefits for the people," she said.
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