Solon: Firms may not pass on full cost of fuel excise tax to consumers

An economist-lawmaker believes that oil firms may not consider passing on to consumers the full cost of excise taxes on fuel as indicated in the Tax Reform for Acceleration and Inclusion (TRAIN) law.

1-PACMAN party-list Representative Michael "Mikee" Romero made the statement Monday night pointing out that oil firms know all too well that Filipino consumers are price-sensitive.

“We have seen in previous big-time price hikes that the oil firms staggered their price adjustments. They might, as they have in the past, spread out the seven pesos in installments. Maybe the staggering could be a P1.50-hike per week. There are other combinations they can do,” Romero, an economist, said.

Under the TRAIN Law, the excise tax rate on gasoline for 2018 is P7 per liter.

“If the oil firms' economists say the P7 is too much to pass on fully at the gas pump, they might recommend to management that the pass on be anywhere within the range of 50 percent to 90 percent of the full P7 excise tax per liter,” Romero said.

Romero also said that motorists and commuters presently have more transport options.

He said owners of gasoline-powered vehicles could start using their units less as they may now switch to public transportation with many different options to choose from.

"The TNCs and TNVS will see their ridership spike because private vehicle owners’ gasoline-powered cars will spend more time parked at home,” Romero said.

The lawmaker advised the Metropolitan Manila Development Authority and the Department of Transportation to "seize this opportunity of a real shift in consumer choices."

“More point-to-point buses should ply the major roads to ferry office workers and students," Romero said.

"For jeepney drivers, the government can revive the Pantawid Pasada Program to subsidize PUJ (public utility jeepney) purchases of diesel which now has an excise tax of P2.50 per liter," he added. —ALG, GMA News