Despite the de-escalation to COVID Alert Level 1 in Metro Manila and several other areas at the start of the month, the rebound of leisure travel has been slow. Players in the food industry, especially operators of karinderyas or micro food stalls and ambulant vendors, are also complaining about much narrowed profit margins even as they are allowed to resume operations at full capacity.
The reason is the surge in fuel prices. Although pump prices have been rising steadily over the past months as travel restrictions were eased in many countries, the Russian invasion of Ukraine has driven global crude oil prices to the stratosphere.
Over the weekend, at least one oil company in the Philippines said motorists can expect continuing fuel price increases totaling more than P5 per liter this week. Mass transport operators and drivers have filed petitions for an increase in transport fares, seeking up to P15 as minimum fare. The soaring fuel prices have been cited by some transport operators as one of the reasons why they allow their vehicles, particularly buses, to be filled beyond 100 percent capacity.
Some lawmakers are pushing for a suspension of the 12 percent value-added tax on petroleum products that was first imposed under the Duterte administration. Opponents of the proposal say the law allows the automatic suspension of the 12 percent VAT when Dubai crude oil hits $80 per barrel for three straight months. But what if the price has gone past $100 per barrel, as it has done for several days now?
In lieu of suspending the 12 percent VAT, government officials have raised the possibility of reversing oil deregulation. This would politicize fuel pricing, which may be good for the administration during price rollbacks, but obviously bad when an increase becomes unavoidable.
Fuel subsidies are also being readied for distribution to the public transport sector. While welcoming any aid, drivers and the other small players in the sector say stopgap solutions are not enough. Today a panel of the House of Representatives will conduct a hearing on the problem. Perhaps they can come up with a response that will balance the immediate needs of the affected sectors and the government’s insistence on collecting the fuel tax.