PNoy to econ team: Study impact of skyrocketing oil prices

(Updated 12:44 a.m./April 7) As global oil prices continue to skyrocket, President Benigno Aquino III asked his economic team to study whether to curb the prices of basic commodities, cut the value-added tax, or pursue a wage hike. "I did instruct them to study… how to mitigate the spiraling oil prices as we don't see a quicker solution to this. Lahat naman pinag-aaralan — kung puwede ang wage increase, ang price control, at bawasan ang value-added tax," the President told reporters Wednesday in an interview at the Department of Budget and Management in Manila. Aquino said he is expecting the results of the study by next week. He said the "Pantawid Pasada," which subsidizes public transport franchisers, is just one of the temporary and short-term solutions that the government had drawn up. VAT reduction The President, who last week rejected calls to cut the 12-percent VAT by half, is now looking at all proposals before deciding to reject or adopt them. Aquino said he wanted to know the possible impact of a VAT reduction on government revenues. Budget Secretary Florencio Abad said the majority of economic managers are against the idea of cutting the VAT and imposing of price control. Slashing the VAT will impact adversely the fiscal position of government and at the same time "not target the sectors that need it most," Abad said "[But] the President said take a second look and come back to me. But as far as some of us are concerned, that's how we feel about the particular proposal," he said. In a statement, militant think tank Ibon Foundation on Wednesday called anew for the removal of the value-added tax (VAT) from fuel products, a move which it said could slash fuel prices by up to P6.60 per liter. The foundation said that without VAT, consumers would pay only P48.26 instead of P54.85 per liter of gas, and P41.44 instead of P47.10 per liter of diesel. The VAT on petroleum products is one of the largest sources of revenue for the government. Since 2006, oil VAT revenues averaged P48 billion. [President Benigno Aquino III] thus rejected calls for the umpteenth time to at least lower the VAT on oil amid the increasingly harsh impact of high oil prices on the public, Ibon said in a statement. Ibon added that this would translate to a difference of P6.58 per liter for regular gasoline, and P5.65 per liter for diesel. The group said that contrary to government claim, the bulk of VAT revenue, or 58 percent, does not go to social services but to debt payments. They also urged the government to find alternative measures to raise revenues that would not be too heavy for consumers. Pump prices of diesel and gasoline have increased 11 times from January to April, bringing a total increase of P8.35 per liter for diesel and P6.50 per liter for regular gasoline. Wage adjustment Abad said the government is also carefully considering a possible wage adjustment, citing that those in the private sector do not enjoy a regular adjustment than those employed by the government. Government is also "looking at both cash and non-cash measures" to benefit the public, according to the budget secretary. Presidential deputy spokesperson Abigail Valte, meanwhile, said the government will soon announce some measures aimed at easing the impact of rising power and oil prices. "When it comes to the prices of basic commodities, the concern of the government is the ordinary people. So, definitely, the solution will be geared for our people," she said. She added that the Department of Energy makes a regular computation of fuel prices, with the data shared each Monday with all stakeholders — mainly transport groups — to show them the appropriate fuel price increase. Valte said the Department of Trade and Industry is also monitoring the increase in prices of basic commodities to make sure there are no unnecessary movements in prices. — AY/JE/PE/VS, GMA News