Oil price slick

ABS-CBN reports that any law that will suspend VAT for oil products shall be vetoed by Gloria Arroyo, says Finance Secretary Margarito Teves. The purported reason is that such a move will be “detrimental to the country’s economy and will only benefit the rich.” According to projections, the government stands to lose Php 54 billion from lost VAT revenues from oil if Mar Roxas’ proposed bill passes.

First, I don’t think Mar Roxas’ proposed measure will prosper. The House is firmly controlled by Arroyo lapdogs, and as such, a counterpart bill is impossible. Even if such a measure passes through the eye of the needle, Gloria Arroyo can simple veto it. And I doubt if both Houses can muster enough votes to override the veto.

Second, the government can always find a way to plug a possible deficit by reducing unnecessary spending. If these elected and appointed officials really mean it, the 40 billion shortfall can be cushioned or eradicated. For example, senators and congressmen and Gloria Arroyo can forgo their pork barrel allocations. Again, that’s impossible, given the kind of characters we have in government.

Third, Teves claims that only the rich will benefit from the suspension of VAT on oil products. He is assuming that the suspension will greatly benefit rich car owners. How about the middle class who owns cars? How about the jeepney and tricycle drivers and operators? And what about the so-called trickle down effect that this regime has been yakking about? Is that also one of this regime’s lies?

No. This regime is composed of goons who cannot afford to scrimp while the people it purportedly serves gets the shorter end of the stick. That 1% tariff reduction is just lip service. Imagine. A one percent reduction can mean a Php 0.23-0.25 in the price of diesel – and the people should be thankful for that. It will take effect two weeks from now, but independent oil players are already proclaiming an increase by January 15. There you go.

I find this piece of news curious:

She said if the tariff’s current rate remains at three percent the government will have windfall earnings of P11 billion but she added that this would be useless if prices of commodities go up as a result of high oil prices.

Using that logic, a windfall of earnings from VAT is useless if prices of commodities go up. Go figure.

So here are the main suggestions on how to cushion the effects of high oil prices:

* The regime slashes one percent from the tariff imposed on diesel. Token gesture as they say.
* Some lawmakers want the VAT for oil suspended. The regime calls it suicidal.
* The Left calls for the scrapping of the Oil Deregulation Law. Businesses (specially oil companies) balk at the idea.

Hmm. Why not reduce the VAT rate for oil to six percent?

Do you have any suggestions? Leave them at the comments.