The Marcos Jr administration can moderate the impact of oil price hikes on millions of Filipinos by scrapping excise and value-added taxes for petroleum products, research group IBON said. The series of oil price hikes imposed by oil companies is an added burden for Filipinos already grappling with high prices and dwindling purchasing power.
The country was hit with another round of oil price hikes today with diesel increasing by Php4.00 per liter (/liter), gasoline by Php0.50/liter, and kerosene by Php2.75. This follows last week’s big-time oil price hike of Php3.50/liter, Php2.10/liter, and Php3.25/liter, respectively. This marks the fifth consecutive week of price hikes for diesel and kerosene and the fourth consecutive week of hikes for gasoline. IBON estimates that the net increase of diesel and kerosene prices so far this year has already reached Php7.50/liter and Php6.00, respectively.
The research group said that the hikes can be mitigated if the government heeds demands to get rid of excise and value-added taxes for fuel products. Data from the Department of Energy (DOE) as of July 28 shows that the common prices for gasoline, diesel, and kerosene in the NCR are Php67.35/liter, Php53.00/liter, and Php69.06/liter, respectively. If excise and value-added taxes are removed, Filipinos will pay 35.7% less for gasoline or just Php51.56/liter, 28.1% less for diesel or just Php47.24/liter, and 18.7% less for kerosene or just Php61.05, according to IBON’s calculations.
IBON said that these big-time oil price hikes will only further shrink the purchasing power of Filipinos. As of July 2023, the real value of the Php610 nominal minimum wage in the National Capital Region (NCR) is just Php515 which is still below its real value before the pandemic, at Php520 when the lockdowns started.
The hike on oil prices will be felt across the value chain of basic commodities, the prices of which were already increasing to begin with. This is because petroleum products are vital in the production and transport of agricultural goods. IBON recently pointed out that the prices of well-milled rice had gone up from Php43.90 per kilo (/kg) to Php45.50/kg in July 2023 year-on-year, bangus from Php203.10/kg to Php207.90/kg, and cabbages from Php78.20/kg to Php97.40/kg, among other basic commodities.
Aside from scrapping burdensome fuel taxes, IBON said that the administration can also expand social protection. This should increase the amount and coverage of cash assistance, fuel and wage subsidies to help especially poor and vulnerable Filipino families, transport workers, and small producers and businesses cope with the rising prices of oil and other basic goods and services.