Wednesday, July 09, 2008 Editorials: E-VAT and oil price controls
WHAT may have been economically feasible and beneficial a few years back may no longer be so today in the face of changing national conditions and global economic forces.
There was a time when it was necessary to regulate the prices of oil products, the reason why then dictator Ferdinand Marcos issued a decree giving subsidy for gasoline.
But the practice was not only a burden to the national treasury but was also against the policy of unbridled market forces.
It then became necessary to free the oil market from legal controls.
And so, some time in 1998, Congress enacted Republic Act 8479, otherwise known as the Oil Deregulation Law.
Need for sanity
Little did anyone expect, though, that a decade later the ghost of the oil crisis in the mid-70s would again emerge to haunt the economic stability of the country.
This time around, the price of oil has gone haywire.
There seems to be no way out but to reassess the need to re-impose some forms of regulations in the oil industry once more, if only to institute sanity to the pricing of oil that fuels inflation and further destabilizes the lives of the impoverished masses.
Taxes
Then of course there is the expanded value added tax that was designed to give government more revenues and more funds to spend on national development.
It has reportedly collected from the oil companies last year some P16.7 billion.
There’s no doubt the oil companies passed these tax on to their consumers, most of whom are public transport operators and companies.
Thus, the current demand for fare hikes by public transport operators is not only due to the rising prices of oil products but also due to the e-VAT passed on to the consuming public by the oil cartel.
Review
Our economy has sadly fallen into a “dog-eat-dog” pit.
It is therefore imperative that the administration of President Gloria Macapagal Arroyo heed the call of the Catholic Bishops Conference of the Philippines to review the government policies on oil subsidy and price regulation.
