Exporters are pushing for the reduction of the 12-percent value-added tax (VAT) on fuel and electricity as the Middle East tensions push up global oil prices, threatening higher production costs and possible business closures.
Philippine Exporters Confederation, Inc. (PHILEXPORT) President Sergio Ortiz-Luis Jr. said a suspension or removal of excise taxes on fuel products by President Ferdinand Marcos Jr. could cut pump prices by roughly P6 to P10 per liter.
“Lower the value-added tax on fuel and electricity to provide relief, even if you remove the excise tax. This is meant to help prevent fuel prices from rising too much,” he said in Filipino in an interview on DZAR 1026 SMNI Radio.
“If gasoline prices increase significantly, it will certainly drive inflation and make things more difficult for everyone. Logistical costs will go up, companies will face higher expenses, and workers will also be affected. Without subsidies, many people will really struggle,” he added.
Ortiz-Luis said that even before the Middle East conflict, there had been earlier suggestions to reduce the VAT but they did not support the measure as the benefits would likely go to heavy spenders, large companies, and wealthier consumers rather than the poor.
“Lowering the VAT would not necessarily benefit the poor. Instead, the savings would mostly go to those who spend more –large companies and wealthier consumers,” he said.
Ortiz-Luis also warned that rising oil prices, fueled by tensions in the Middle East, could force many businesses to close, resulting in job losses.
He said businesses are facing mounting costs as fuel prices rise, adding that fuel prices are paid in dollars.
“Even our advantage of having many OFWs (overseas Filipino workers) sending remittances home may be affected, as some of them could be hit by the situation and may send less money. At the same time, the purchasing power of the peso keeps shrinking because we are paying more dollars for fuel imports,” he added.
Further, Ortiz-Luis expressed hope that the Middle East conflict would not last too long, as he underscored the need for everyone to work together by conserving fuel wherever possible.
“If we can find alternative ways to generate power and electricity, then it’s good,” he said.
