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Oil levy for nationwide infrastructure work proposed

/ 06:14 AM November 08, 2014

An oil industry player is pushing for a special tax pegged to low oil prices to help fund road and bridge construction projects that will benefit motorists.

Eastern Petroleum chair Fernando L. Martinez told reporters that he would seek the support of legislators on a proposal to impose a P1 per liter “special tax” on oil for infrastructure work.

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“We can impose this even on just gasoline,” Martinez said. “The amount collected may reach P10 billion to P15 billion for the next two years, and can help the government build roads and bridges.”

Martinez said that the levy should only be imposed while international crude oil prices are below $100 per barrel—something that analysts predict could last over two years. The levy should be scrapped as soon as international prices hit $100 a barrel and above, he said.

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As for the infrastructure to be built using the levy, Martinez said these should be toll-free.

“The infra built from such a levy should be freeways so that consumers can really feel the benefit of their tax,” he said.

Martinez said a similar program was undertaken in 1987 and 1988, when the government imposed a P1 per liter levy on gasoline to fund government programs.

“However there should be consumer representation in the group that will administer the fund,” Martinez said.

Oil prices have been on a down trend for most of the year as robust production and weak demand combined to keep prices weak.

Although geopolitical tension in places such as Iraq spooked markets now and then, the oil and gas boom in the United States, a major commodity consumer, had kept demand soft.

Countries exporting oil have yet to restrict production to protect prices, bringing them down to about $80 to $90 a barrel from previous $100 a barrel.

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TAGS: Business, Eastern Petroleum, Fernando L. Martinez, Infrastructure, Oil levy, Special tax
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