Ronnel Domingo of Philippine Daily Inquirer posted this article entitled “Gov’t gains P1.2B from high oil prices” on Inquirer.net last April 13, 2011. This is what was said in the article:
“The Aquino administration enjoyed a windfall of some P1.2 billion in January and February from surging prices of oil imports, Finance Undersecretary Gil S. Beltran said. Beltran said in an interview that the unexpected gain came from collections of value-added tax on petroleum products, the prices of which were pegged at about $89 a barrel in the first two months of the year. Tax collections rise along with world oil prices since the higher the price, the higher the proportionate and corresponding value of the 12-percent VAT. The Department of Finance (DoF) recommended that the VAT on petroleum products be collected as usual despite calls for its removal as prices shoot up due to tensions in the Middle East. Based on a DoF document, the department said removing the tax or putting a cap on it was ill-advised considering that VAT on oil amounted to P47 billion in 2010, representing 12.5 percent of total VAT collections for the year and 4.3 percent of total tax revenues. ‘Removal of the VAT on oil will cause major dislocation in the finances of the government,’ the DoF said. ‘A cap on VAT on oil will also render revenue programming uncertain since it will be made hostage to the movement in oil prices,’ the agency added. For 2011 when the government expects to spend P300 billion over the budget, Malacañang hopes to raise a total of P1.41 trillion in revenues. The DoF said the abolition of the VAT on oil was also bound to benefit the rich more than the poor because petroleum products were consumed directly more by those in the middle- and high-income economic groups.”
Truly, the economy is very confusing especially if it is not studied well by a person. Honestly, I am totally confused with it. The people on TV have never been ended on complaining and disputing about the ever increasing price of oil. There had been a lot of transport strikes in the past years as a way to express the disapproval of the common people. I know that it is a big burden to the poor drivers and passengers of public and private transportation. I, myself, am a passenger of a public jeepney and for almost two years of commuting I have noticed that the drivers earn a very little revenue. Much of their income would be intended for gasoline/oil and for the rent of the jeep. I feel pity for them. It is so hard to earn a living these days and a whole day of hard labor is still inefficient to sustain the family! Now this article says that our government is gaining from the increase of prices! What do this mean? Does this mean a burden to the poor families and a benefit/relief to the government? If the government will spend the P1.2B to pay our country’s debts the benefit would be useful and the hardship of the poor Filipino people will not be in vain.
The positive and negative effect of this surging oil price in our country has questioned my assessment of dispute against the government and the oil companies. For now, I just hope that this benefit that the government has gained will be used for the betterment of the country. One more thing is that if the oil prices will continue to surge, similarly, the government should also increase the wages of the working people. If only it is possible to do that. I also hope that the government would devote more effort in uplifting the standard of living of the Filipino people. My teacher in Social Work has told our class before that the Philippines has a lot of natural resources of which we could utilize to increase our production. But then why haven’t the government made use of this stated natural resources? Our teacher added that we also have here in the Philippines the primary material in making tires. But why hadn’t we made it our own means of production? Our government should also support local inventions to process our rich resources into finished products.
Through this reaction blog, I have expressed my points and questions but still I have a little understanding of the dynamics of the economy. I still have a lot to learn in order to understand the Philippines' situation.
- Shekinah Kaysel Arguilla
ECON 111
