NextGen Day

MANILA, Philippines — According to Fernando Martinez, chair of the Independent Philippine Petroleum Businesses Association (IPPCA), oil companies are spending PHP15 billion more to import the same volume of petroleum products due to rising global oil prices.

Martinez reaffirmed the industry’s plea for the government to suspend the excise tax on petroleum products to mitigate the effects of rising oil prices at a Senate Energy Committee meeting on Monday.

The proposal to increase the monthly inventory requirement for petroleum products from 15 to 30 days was met with opposition from the sector.

“Physically, this is not feasible because not all gasoline depot locations have the physical tank storage capacity or available acreage for growth,” Martinez explained.

He went on to say that small business couldn’t afford to expand their monthly stock requirements due to the higher capital required to import oil items.

“This regulation would quadruple the working capital demand and will be added to the local gasoline expense,” stated the IPPCA’s president.

Martinez claims that the government can afford to suspend the excise duty on petroleum goods despite rising fuel prices since the government’s value-added tax (VAT) collection for the commodity is also rising.

“Even if you postpone the PHP6 particular tax, you will quickly counteract it with the next round of oil price hikes,” he warned.

Department of Finance (DOF) Undersecretary Valery Joy Brion testified at the same hearing that the government collected an excess of PHP3 billion in oil excise taxes from January to February this year due to higher gasoline prices.

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