Avoid a repeat of last year’s grievous high prices

Published January 3, 2019, 12:31 AM

by Manila Bulletin

e-cartoon-jan-3-2019This first week of the year, people are wondering what to expect in the matter of fuel prices. Will the pump prices in gasoline stations start rising now as the government starts collecting a new tax increase of P2.24 per liter? Or will the companies defer charging the higher rates until about 15 to 30 days from now, when their old stocks run out?

Last year when inflation rates started rising to their highest levels in years – it was felt by the public in the form of zooming market prices – the government blamed it on rising global fuel prices. It could not be denied, however, that the new government tariff on fuel imports – P2 per liter – was a major factor. These two factors combined with price manipulation in the markets to make 2018 a very difficult year for Filipino housewives with limited incomes.

As inflation hit a high of 6.7 percent in September, the government thought of postponing the collection of the next year’s fuel tax of P2 per liter. But then world prices started subsiding after September and local pump prices also started going down. And so the government decided to go on with collecting the P2 tax for 2019.

The government warned local oil companies, however, that they should not immediately raise their pump prices; they should wait until their present inventories are exhausted in 15 to 30 days.

The new importations of diesel, gasoline, kerosene, and other petroleum products are now being charged P2 tariff plus 24 centavos in Value-Added Tax (VAT). Any time now, the oil companies will announce their old stocks have been depleted and they must now add P2.24 per liter to their usual prices.

Government officials can only warn against “premature price increases” but in 15 to 30 days, the price increases will be a natural result of the additional tax of P2.24 per liter of fuel.

The government needs funds for its own operations as well as for projects such as new roads and bridges, new airports and seaports, new public buildings, etc. – which is why it needs to collect taxes from business operations. corporate and income taxes, and a host of other sources of government income. The TRAIN law imposed a new tariff on fuel where there was none before, and this became a new burden on the people in the form of higher food and other market prices.

We can only hope that this year’s market prices increases will not skyrocket the way they did in 2018. Our officials should also be sensitive to events in the world and local markets as they affect local prices and act promptly as needed if these prices go out of hand.