OIL TRANSNATIONALS WILL BENEFIT MORE WITH TARIFF CUT – IBON

Independent think-tank IBON Foundation said that the tariff cut on crude oil imports would mainly benefit the transnational corporations (TNCs) that dominate the local oil industry while having a negligible, if any, effect on pump prices.

Experience shows that TNCs pass on costs of high tariffs to pump prices but enjoy savings when tariffs are low. Firms do not actually translate tariff reductions to lower oil prices and do not deliver on consumers’ hope for reduced prices on oil products. In fact, the first reaction of independent oil players to news of the tariff cut was to say that it was not enough to ensure lower pump prices.

The only answer to high oil prices is for government to nationalize the local oil industry, starting with the repeal of the Oil Deregulation law (Republic Act 8479). The law has only allowed TNCs to further intensify their control over the local industry even as it has resulted in near-weekly rounds of oil price hikes.

IBON reiterates the call for the lifting of the 12% value-added tax on petroleum products since it would result in a substantial reduction in pump prices of at least P4 per liter; such a call is in the spirit of the more urgent necessity of governemnt regulation of the industry.

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