We have to brace for the possibility that prices of basic goods and services will continue to go up as we head to the holiday season.
Over the past eight weeks, prices of petroleum products have incessantly gone up, in what oil players explained was due to a confluence of factors that included the depreciation of the peso against the US dollar and more importantly the significant increase in the price of crude oil in the international market.
Last month, it was noted that oil prices spiked to its highest in seven years amid the diminishing global supply. This supply shortage situation is compounded by the increasing demand in the US.
There are expectations of continuing uptick in oil prices with the opening up of more economic sectors following the relaxation in the quarantine level down to Alert Level 2. Expansion in economic activities is equated to an increase in oil consumption.
The long weekend is a testament of the longing of the people to get out of their homes after spending roughly 20 months in seeming agony. Small businesses have opened up while there were traffic snarls as almost everyone was out enjoying their freedom from the pandemic-induced lockdown.
It feels like a déjà vu. It wasn’t long ago. Months prior to the declaration of the pandemic, we were in the same situation with the continuous increase in the price of fuel products. There were also talks of suspending the excise taxes on oil.
Now, Energy Secretary Alfonso Cusi was quoted as saying there’s the possibility for the Department of Finance to suspend the excise tax. The suspension of excise tax on petroleum products is allowed under the Tax Reform for Acceleration and Inclusion Law otherwise known as TRAIN law.
There’s got to be a reality check here. Question is: can the present administration well afford to suspend the levy, which will cost some P131 billion in foregone revenues for the already cash-strapped national coffers.
Definitely, the spiraling fuel price is another financial load to an already burdened consumer. Just today, authorities admitted that the uptick in oil prices caused the inflation rate to remain elevated at 4.6 percent in October. Although authorities described this as transitory, still the uptick in global oil prices is a risk that could keep inflation rate elevated.
Disturbing as this situation may seem, let’s be more circumspect on the assurances of presidentiables – Vice President Leni, Senator Ping Lacson, Manila Mayor Isko Moreno – that they would do something about it, like considering the suspension of excise tax on petroleum products.
It’s one thing to hear assuring words from these politicians in order to gain traction and court voters to their side, but it’s another to see if such promises will be fulfilled.
Reality check is needed here because if we err, it would take another six years to correct our errors. As the saying goes, reality bites.
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