"We reiterate our willingness to sit down with the technical working groups of both Houses of Congress to actualize a tax adjustment system on petroleum products that is kinder to poor consumers and fair to everyone," IPPCA chairman Fernando Martinez said.
"Knowing we are in difficult times, IPPCA tried to avoid passing on to consumers the oil price increases in the global market last January," he said.
He noted that import prices of refined petroleum products went up by an average of $2.10 per barrel of diesel and $ 2.51 on premium gasoline. This resulted in under-recoveries by an average of 75 centavos per liter across products starting in January.
The IPPCA official said the appreciation of the peso did not help in lowering oil prices. "The stronger peso was enough to absorb the price hike."
"These have eroded our tiny margins and impaired our continued viability as business concerns. We are bound to incur heavy losses should we continue absorbing the price spikes. Although we did not want to, we needed to make the price adjustments to stay afloat," he pointed out.
Martinez also noted that the recent round of price increases only underscores the sensitivity of local prices to price movements in the international marketplace.
"It magnifies the impracticality of imposing percentage taxes on oil products like import tariffs and value added taxes (VAT) that also go up and down with prices," he said.
With this, IPPCA urged the lawmakers to review the proposed VAT law. "In a climate of volatile prices, we appeal for Congress to take a second hard look at our suggestion of adjusting the price-neutral, socialized, specific (excise) tax system already collected on oil products, instead of the VAT which tends to compound the situation and penalize harder the poor consumers whenever import prices go up," it said.
"A 45-centavo per liter incremental excise tax on diesel and a P1.50 tax on premium gasoline are immune from future price fluctuations, a feature not found in tariff duties increased last Jan. 1 and the proposed VAT on oil. Fixed taxes on oil are cushions against the inflationary effects of sudden price increases," the group added.