DTI: Price compliance at 100%

MANILA, Philippines — Price compliance among manufacturers of basic goods and commodities has remained at 100 percent amid fears that some businessmen are taking advantage of soaring global crude costs and the effects of the Tax Reform for Acceleration and Inclusion (TRAIN) law.

Trade Secretary Ramon Lopez yesterday said it is hard to catch someone if no one is actually violating the law.

“We have not seen changes in the suggested retail price (SRP). Price compliance is 100 percent. I double-checked this and had it rechecked by our price monitoring team,” Lopez said.

He said the Department of Trade and Industry (DTI) is being challenged by some lawmakers to catch profiteers.

“So far we really cannot find (profiteers), that is why we cannot catch anyone. In fact, I want to catch someone but there is really none. Everybody is complying (with SRP),” Lopez said.

Lopez said while there may have been isolated cases of one or two brands in some stores that are not complying with the SRP, manufacturers correct their pricing immediately once their attention is called by the DTI.

“You know why? Based on my experience in a company before, once there is a violation in SRP and DTI has called your attention, the manufacturer is afraid that his product would be removed from the shelves because that is a mortal sin. Imagine, you invest in advertisements for your brand and then suddenly when consumers look for your products in the stores, (these are) not in the shelves,” he said.

President Duterte has mobilized concerned agencies and ordered them to take immediate steps to ease consumer woes and protect them from profiteers.

Last year, the DTI scrapped the practice of pre-approval on the setting of SRP of basic necessities and prime commodities as it decided to hand over control to manufacturers.

Manufacturers, however, are still required to submit updated SRPs of basic necessities and prime commodities and notify the DTI Consumer Protection and Advocacy Bureau of any adjustments.

The DTI steps in and investigates if all brands implement similar price hikes at the same time.

Lopez said only two brands have recently raised prices due to higher cost of tin plates.

“Aside from that, there have not been any (other price increase),” he said.

VAT exemptions

For his part, Sen. Panfilo Lacson is once again pushing for a reduction in the number of value-added tax (VAT) exemptions to generate additional revenues while easing the burden on consumers who have been reeling from the continued rise in the prices of fuel and basic goods.

Lacson said the outcry over the never-ending increase in pump prices and inflation could have been avoided had his colleagues in Congress agreed to his proposal during the deliberations on the TRAIN to reduce VAT exemptions and bring down the VAT rate from 12 to 10 percent.

During the Senate debates on TRAIN, Lacson said there was a need to reduce the 143 VAT exemptions granted to various sectors, which he said cost the government significant revenues.

He noted that the Philippines has the most number of VAT exemptions among Association of Southeast Asian Nation (ASEAN) countries, with Thailand having only 25, Indonesia at around 20 and Malaysia with just 14.

According to Lacson, the total exemptions granted by other ASEAN countries would still be lower than the 143 provided by the Philippine government.

Under Lacson’s proposal, 78 exemptions would be removed out of the 143 and the VAT rate would be brought down to 10 percent from the present 12 percent.

Even with the reduction in VAT rate, Lacson claimed that the government would still be able to generate incremental revenues amounting to P117 billion from the removal of the 78 VAT exemptions alone.

He recalled how his office consulted with the Department of Finance (DOF) during the deliberations on the TRAIN. The DOF was supportive of his proposal, Lacson claimed.

However, he said his colleagues in Congress did not support him because they had interests or stakes in the sectors that would be hit by the removal of the exemptions such as eco-zones, power, housing and cooperatives.

Lacson said he intends to revive his proposal in light of the spike in the price of fuel and basic goods.

He is currently looking for a member of the House of Representatives to file a counterpart bill because under the law, all bills related to revenues must originate from the House.

Lacson said he would consult the DOF again just to see where they stand on this now because if they would no longer support his proposal, then it would be good as dead.

Tax on fuel

Meanwhile, a ranking government official yesterday said the Department of Energy (DOE) could recommend the suspension of excise tax imposed on fuel products if international crude prices stay at $80 per barrel for three months.

In an interview over dzBB, DOE undersecretary Donato Marcos said the agency will recommend to the DOF the suspension of excise tax on fuels under the TRAIN if benchmark crude prices persist at the $80 per barrel level.

This was earlier announced by DOE-Oil Industry Management Bureau (OIMB) director Rino Abad, who said the agency will recommend the suspension of the excise tax on fuel scheduled in 2019 once world oil prices hit the three-month average of $80 per barrel.

Energy Secretary Alfonso Cusi also said the agency is studying several options, including the suspension of the excise tax on fuel.

“I believe there is a mechanism on the implementation of excise tax when oil price reaches certain levels,” he said.

Starting last January, the TRAIN imposed higher excise tax on gasoline from P4.35 per liter to P7 per liter and new tax rates of P2.50 per liter on diesel, P3 per liter on kerosene and P2.50 per liter on auto liquefied petroleum gas.

However, there is a provision in the law that the TRAIN taxes on fuel products will be suspended when the benchmark crude oil prices hit $80 per barrel for a period of three months.

The DOE has also met with oil companies to give them further discounts, provided they scale up their corporate social responsibility programs to support the transport sector and even the marginalized, which will be formalized through a memorandum of agreement (MOA) with the DOE.

At present, owners of public utility vehicles avail of a P1 per liter discount under an existing MOA between the DOE and only three oil firms – Petron Corp., Phoenix Petroleum Philippines Inc. and Pilipinas Shell Petroleum Corp.

Political concessions

The Philippines must develop political concessions with oil producing countries and harness indigenous sources to bring oil prices down, Sen. Sherwin Gatchalian said.

The lawmaker, who chairs the Senate committee on energy, said the country is a major importer for its energy needs and is therefore affected by price movements in the international market.

“(The Philippines) imports almost 90 percent of its crude oil and almost 90 percent of its coal that power our power plants. This means that any disturbances in the different oil exporting countries will unfairly and directly impact our ordinary Filipino consumer,” he said.

Since oil is dictated by global prices, the Philippine government must develop and take advantage of political concessions to get it at a cheaper price, Gatchalian said.

“The only way we can get cheap oil is through political concessions. Good relationship with these oil exporting countries might benefit us to this effect,” he said.

But Gatchalian said the Philippines should move toward a sustainable solution by developing renewable energy and biofuels.

“These two sources of energy are abundant in our own soil. The government should provide a conducive environment to allow the private sector to invest in indigenous energy sources that will lead to our independence from foreign sources,” Gatchalian said.

Last Saturday, President Duterte ordered the DOE to look for cheaper sources of petroleum products, particularly from non-members of the Organization of Petroleum Exporting Countries (OPEC).

However, a majority of the Philippines’ oil imports come from OPEC members. Data from DOE showed that 90 percent of the imported crude oil last year was sourced from the Middle East. Saudi Arabia was the top supplier with 36.6 percent, followed by Kuwait with 30.2 percent and United Arab Emirates 17.6 percent. – With Marvin Sy, Danessa Rivera