Tax on ‘dirty fuel’ to stay

From the monitoring of the Department of Energy (DOE), the world price of imported diesel averages at $166 per barrel from the previous $149, or the price went up by as much as $17. This was more than its usual $1 per barrel rise at the most in the past. This week’s P6.55 per liter hike in diesel price pushed it closer to the pump price of gasoline that was raised by P2.70 per liter.

The increase in the pump price of diesel this week is unprecedented in most recent time in our country. Diesel is the commonly used fuel to run public transport vehicles. Thus, jeepney operators and drivers could only decry the latest round of oil price hike would further drive them into the ground, literally.

Given this latest big-time price hike of diesel, a liter now costs P82.65 thereabouts. But pump prices of unleaded diesel as well as diesel Euro4 as additives for clean-burning fuel will cost more the motorists.

Surely, there can be no other major cause of this spike but the Ukraine-Russia war that is now going on its fourth month already. The increasing demand for fuel also has notably doubled as China’s economic production churns back again to full steam as pandemic lockdowns are gradually eased.

Dependent on importation of refined oil products, the Philippines reels from the brunt of the Ukraine-Russia war. The timing is worse as the United States started raising its interest rates that also impact heavily on emerging economies like us here in the Philippines. These major “external factors” enumerated by outgoing National Economic Development Authority (NEDA) Director-General Karl Kendric Chua are buffeting the Philippine economy as it sails through the last few days in office of outgoing President Rodrigo Duterte.

Taking note of the significant success to put under control the COVID-19 pandemic, the Duterte economic team lowered the original target of 7 to 9 percent growth of the country’s domestic product (GDP) to 7 to 8 percent precisely due to the projected effects of these external factors beyond the control of the Philippine government.

As early as last month, Chua admitted these external shocks are causes of concern also for the next administration of incoming President-elect Ferdinand “Bongbong” Marcos Jr. Speaking in our Kapihan sa Manila Bay virtual news forum last May 25, the outgoing Socio-Economic Planning Secretary, however, remains optimistic to the country’s strong macro-economic fundamental could absorb much of these external shocks.

Given this situation, Chua frowned upon persistent appeals for the government to suspend the excise tax on imported refined oil products supposedly to stave off the steep rise in fuel prices here. “To better address the problem, we propose instead to use the excess revenue (from excise taxes on fuel products) to provide more subsidy to those who really need them,” Chua pointed out.

Based on the NEDA studies, Chua disclosed, it has been shown that only ten percent of the upper income bracket of the population consume as much as 50 percent of the total fuel sold, especially diesel. High-end sports utility vehicles and even certain car brands run on diesel and mostly used by the rich or wealthier sector of the Philippine society. Thus, Chua argued against suspending the excise tax on fuel products that would “largely benefit the rich” and subsidizing them and other vehicle owners.

“And even we have higher fuel prices here, traffic is not going down. So we’d rather keep the excise tax revenues and use excess revenues to support the commuters,” the young technocrat pointed out.

To further change the mindset of motorists over their diesel-guzzling vehicles, Chua attributed to President Duterte a landmark law setting into motion the Electric Vehicle, or E-Vehicle Industry Development Act. This law, he noted, will push the deployment of more environment friendly motor vehicles and enhance the climate change initiatives in the Philippines. Alongside with it, Chua added, the government started the jeepney modernization program in 2017 in a bid to introduce safer and “climate-friendly” modern jeepneys. Chua aptly described the modern jeepneys as look-alike of “mini-buses.”

However, its short-term effects are immediately felt especially in the public transport sector as well as commuters still at the stage of recovery from the pandemic. From the severe economic displacement following the COVID-19 pandemic outbreak that started in March 2020, the public transport sector has slowly restarted plying back the commuter routes in the usual busy thoroughfares in Metro Manila and elsewhere around the country.

Originally launched under Republic Act (RA) 11494, or the Bayanihan to Recover as One Act, the Department of Transportation (DOTr) implemented the Service Contracting Program meant to provide a temporary livelihood to displaced transport workers following the lockdowns due to the COVID-19 pandemic. Under this program, the government allocated P7 billion this year to provide free public transport to commuters while paying for the salary of public transport drivers.

In March this year, the DOTr administered an additional P3 billion to fund fuel subsidy and fuel discount programs to mitigate the initial impact of soaring fuel prices following the Russia-Ukraine war. The DOTr reported having distributed fuel subsidies to a total of 180,000 public utility vehicle operators as of June 1.

The fuel subsidy program dubbed “Pantawid Pasada” is a financial assistance worth P6,500 and is intended for those affected qualified drivers of jeepney, UV express, mini buses, buses, shuttle services, taxis, tricycles, and other full-time ride-hailing and delivery services.

For now, the most vocal leaders from organized public transport groups could only plead the government to allow them to raise the minimum fare from the present P9 to P10.

A fare hike could at least stave off the demise of the iconic jeepneys plying around our country’s roads.

It seems that this “tax on dirty fuel” is likely here to stay on as anti-air pollution policy here in our country.