THE DECLINE in oil prices is seen lowering the country’s import bill this year by $6 billion, or about P267 billion, which the Department of Finance sees as a boon to consumer spending but a bane to revenue collection.
At a global oil price of about $50 dollar per barrel or half the government’s assumption of $100 a barrel for its existing macroeconomic targets, the consumption and savings of Filipinos would get a big boost, Finance Undersecretary Gil S. Beltran told reporters yesterday.
Instead of importing the country’s oil requirements this year at an average cost of about $12 billion, only $6 billion would likely be spent as global prices go on a steep downward trend, Beltran said, citing DOF estimates.
“That’s $6 billion in purchasing power,” Beltran pointed out.
As consumer spending has been consistently boosting the domestic economy, cheaper oil is seen as “positive for the Philippine economy,” he said.
However, the same positive sentiment cannot be reflected in terms of the government’s collections of taxes and duties from oil firms.
“If oil prices are lower, tax collections would also be lower,” Beltran noted.
This would put at risk the revenue collection targets of the Bureaus of Customs (BOC) and Internal Revenue (BIR).
This year, the BOC is mandated to collect P456 billion in duties, while the BIR must collect a higher P1.72 trillion.
Last December, Customs Commissioner John Phillip P. Sevilla said the agency’s 2015 collection target was “impractical and unrealistic, especially with oil prices down.”
“(We) don’t expect Customs to collect the usual, unless we adjust the import duty,” Beltran said.
Early this month, the Cabinet-level Development Budget Coordination Committee or DBCC decided to keep the 2015 collection goals earlier set for the BOC and the BIR, as the government wants to adjust the expenditure side of the budget through faster spending rather than slashing the revenue targets.
According to reports, J. P. Morgan over the weekend slashed its average Brent crude price forecast for 2015 to $49 per barrel from $82 previously.