Neda more worried by food than oil prices

Despite calls for the suspension of oil excise taxes amid high global and local prices, President Rodrigo Duterte’s economic team remained cold to the proposal due to its supposedly minimal impact on inflation but huge impact on revenues.

Socioeconomic Planning Secretary Karl Kendrick Chua told a forum organized by the Economic Journalists Association of the Philippines on Thursday that he was more worried about still-expensive pork, especially in areas outside Metro Manila.

As such, Chua, who heads the state planning agency National Economic Development Authority (Neda), urged the distribution of imported pork in wet markets in the provinces and not just in supermarkets in the National Capital Region.

“Our priority is to make sure that all 111 million Filipinos have access to affordable food,” Chua said, also citing the importation of fish to ensure ample supply amid the closed fishing season.

Ease impact

As for oil, Chua said the government’s response will be calibrated depending on whether recent global price hikes would be temporary or permanent.

To ease the impact on drivers of public utility vehicles (PUV), like jeepneys and buses, Chua said the government should utilize the P3-billion budget for service contracting on top of the P1 billion to be given away by the Land Transportation Franchising and Regulatory Board under its Pantawid Pasada program.

Chua also urged a review of the seat capacity rules covering PUVs to possibly increase the number of passengers per trip from only 50 percent at present, in a bid to hike drivers’ incomes.

“As we have more people vaccinated [and] lower cases of COVID-19, there is an opportunity to review the seating capacity. We have to look at the entire picture. If you have more people in the jeep or bus, that might increase the risk of COVID-19. But these same people are falling in line in the bus station waiting for the bus and also crowding the bus station. So once we see it from this bigger perspective, perhaps we can find an opening for a gradual adjustment of the seating capacity,” Chua said.

Meanwhile, Finance Director Nina Asuncion reiterated during a hearing at the House of Representatives that the Department of Finance “does not support the proposed suspension” of fuel excise taxes as well as the 12-percent value-added tax (VAT) slapped on the commodity due to an estimated P147.1 billion in excise and VAT to be foregone if implemented next year.

“The unrealized public spending and investments from the foregone revenues will be detrimental to our economic recovery and long-term growth,” Asuncion said.

Asuncion also pointed to an only “temporary” inflation relief, which she said was estimated by the Bangko Sentral ng Pilipinas (BSP) at a mere 0.02 percentage points in the medium term and 0.01 points in the long run.

Headline inflation averaged 4.5 percent as of end-September, higher than the BSP’s 2 to 4 percent target range deemed as manageable price hikes conducive to economic growth and recovery, mainly due to expensive food and high transport costs.