MANILA, Philippines—Petron Corp., the country’s largest refiner and retailer, is urging the government to put a cap on the existing excise and value added taxes levied on oil imports, so as to prevent the unwarranted spikes in local pump prices.
“I hope we can request the Department of Finance to review the taxes because the government is earning around P15 to P16 in excise and value added taxes combined, from every liter. That’s a windfall for them. Kawawa naman mga drivers natin (The drivers are in a pitiful situation),” said Ramon S. Ang, chairman and CEO of Petron.
Ang told reporters on Tuesday that the value of these local taxes would rise along with any increases in the prices of oil in the global market. At present, oil is hovering at about $100 to $120 a barrel, translating to roughly P15 to P16 in local taxes.
“Those (local) taxes should not increase that much,” he stressed.
But if the government capped the prices based on the “normal world oil prices” of about $50 a barrel to $60 a barrel, the local taxes slapped on fuel products would be halved to about P8 a liter—a big help for motorists and public utility drivers, he explained.
“We have to request the DoF to review and put a cap on VAT and excise taxes so that the prices of fuel products will not shoot up as much,” Ang said.
He noted that such a proposal—which was already submitted earlier to the DoF— would address the complaints by motorists, particularly the ailing transport sector, which has been bearing the brunt of all these fuel price increases amid a regulated transport fare system.
“The public utility drivers are complaining, saying that oil companies are raking in profits, and that is why the prices of fuel are high. But no, our profit averages only to a maximum of P2 a liter. What they need to understand is that when the prices of oil in the global market rise, so do the excise taxes and VAT,” Ang stressed.
Not putting a cap on these taxes will not only allow jeepney drivers to continue suffering from high fuel prices, but may even encourage fuel smuggling, Ang warned.
Two years ago, Ang cited a study that found that as much as 30 to 35 percent of the gasoline and diesel being sold in the market came from oil smuggling. This, according to him, was equivalent to tax losses for the government of about P30-P35 billion back then.
Ang also said that Petron’s books have always been open for audit, to show proof that the oil company has not been earning more than P2 a liter from the sale of petroleum products.
“We’re open for anybody to come and audit our books… The transport groups could hire their own auditors… Our books are open for everybody,” he added.