POSTSCRIPT / September 17, 2000 / Sunday


Philippine STAR Columnist

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28% of fuel price goes to gov’t; 3% to oil firms

LONG feigning helplessness in the face of rising fuel prices, the government actually grabs the biggest share in the pump prices of gasoline and other petroleum products — in fact, 10 times what the oil company gets.

For every peso that you pay for fuel, the government gobbles up 28.4 centavos in specific taxes — compared to the 2.8 centavos going to the oil company. That huge tax bite is on top of the 3.3-percent in duties and taxes that the government had already collected on the imported crude oil.

The 3.3-percent import levy becomes part of the landed cost of crude oil. And landed cost accounts for 63.2 centavos of every peso that you pay for gasoline, making it the biggest component of the pump price.

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IN short, taxes are one big reason for the high price of gasoline. The government should do its part in looking for ways to cut prices. One option is to reduce its duties and taxes on crude oil and/or petroleum products.

In the worldwide furor over rising costs of fuel, some European governments (Italy, for one) averted a crippling strike of haulers by giving them fuel discounts and making it easier for them to claim existing rebates.

There is similar agitation in some countries to lower fuel taxes or at least hold to present rates. Protesting haulers in some German cities clogged the roads as Chancellor Gerhard Schroeder refused to abandon plans to raise fuel taxes.

In Manila, the administration does not seem in the mood to cut taxes as it faces a huge shortfall in revenues. Maybe it’s waiting for protest action to move it.

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THE 2.8 centavos (per peso pump price) we mentioned above as going to the oil company is not pure profit. The amount includes refining and marketing costs that do not go into the firm’s disposable revenue.

The dealer’s margin — 4.4 centavos per peso pump price — is even bigger than the programmed profit of an oil company experiencing under-recovery. (We erroneously said in an earlier column, quoting sources, that the dealer enjoys a P2 profit per liter of fuel sold.)

The pump price breakdown cited here is as of March 2000, when we asked one big oil company for audited figures, but the percentages will not vary much compared to present data. March was the time when unleaded gasoline cost around P15.30 per liter and the oil companies were claiming a 4-percent under-recovery.

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TO summarize, this was the breakdown of the pump price of unleaded gasoline in March: Landed cost of crude – 63.2 percent; specific tax – 28.4 percent; domestic freight – 1.2 percent; dealer’s margin – 4.4 percent; marketing/refinery costs and profit – 2.8 percent; under-recovery – 4 percent.

For comparison, the same percentages in February 1999 when unleaded gasoline was selling at some P11.20 per liter were: Landed cost of crude – 44.3 percent; specific tax – 38.8 percent; domestic freight – 1.6 percent; dealer’s margin – 6 percent; and marketing/refining costs and profit – 9.3 percent.

With the oil companies pleading that they have nothing to do with the rising crude oil prices in the world market, the burden of shaving the pump price appears to have fallen on the government. Pressure is mounting for it to reduce its tax bite.

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READER Oscar Mejia suggests “political brinkmanship” for President Estrada to “arrest the downward spiral in our economy brought about by an increasing budget deficit.” He says the President must consider these measures:

  1. Abolish pork barrel. Although denied, pork barrel is still being used for political expediency. The claim that pork is needed for additional infrastructure and social services does not hold water anymore in the light of economic slowdown and underutilized industrial capacity.
  2. Restructure maturing debt payments. The IMF/World Bank and other foreign creditors would understand.
  3. Ban importation of luxury goods. This would reduce the negative balance of trade and emphasize the positive attributes of increasing exports in the light of the peso depreciation.
  4. Streamline government bureaucracy and expenditures.

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SERG Firmacion II of Cagayan de Oro notes: “Just yesterday, the headline read, ‘Angry Erap cuts short trip to US.’ The next day, on the front page, the story goes that Erap is back to convene an emergency meeting to discuss the crisis regarding the new Abu Sayyaf kidnapping.

“Then I was floored to read, ‘… but the President wasn’t able to attend the meeting.’ What’s this? Yesterday, Erap was angry. Today, he overslept, and forgot about the emergency meeting that he called. I’m embarrassed we have this kind of president.”

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PRESIDENT Estrada finally did yesterday what he had been urged to do a long time ago and which he was expected to do shortly despite his attempt to hide his intentions on the Abu Sayyaf holed up on Sulu island.

With the military in place and with the world given the subliminal message that the United States was fully supporting military action, the Commander-in-Chief ordered yesterday a full-scale assault on the kidnappers.

A minor note: Maybe his writers should have cut his statement on radio and TV to a third of it length. It dragged on, dissipating in repetition and clichés the impact of his “go-get-em” remarks.

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ANYWAY, the bomb is on its way. It is inconceivable that the attack would be called off, what with the attendant thunder and lighting at the launching of the attack despite the supposed news blackout.

Now let’s sit back and watch how the Abu Sayyaf would, again, slip through the military cordon around the island.

As we’ve said, please prove us wrong in our prediction of the terrorists eventually sneaking through the noose tightening around them.

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WE’RE glad also that the government has started to carry out the media blackout that we suggested several months back.

Malaysian reader Tam Yeng Siang says it’s time the President “did something firm and damn world opinion!”

Agreeing that there should be a news blackout on the hostage situation, he says: “Why should you allow the solons and all those looking at June 2001 to grandstand when failure can bring the government to its knees! The media always seem to be one step ahead of the government. Even laymen seem to know more of the hostages than the Palace itself! Shut up the press, forget the pogi points and do what you have to do.”

Miguel Bolos using a hotmail address: “You’re absolutely right that we have been taken for a ride by Libya and very smartly at that too. Imagine being able to do overtly what they have been doing covertly all along with the added bonus of reaping praises from the European community. I have never seen a better example of hitting two birds with one stone as well as stupidity and hypocrisy on a grand scale.”

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THE car park manager of the international airport reacted to our recent comment that “one can locate the NAIA parking lot by just smelling his way to it… the stink of urine is wafted a mile away.”

Col. Rodolfo Bonanza the manager insisted that “our rest rooms are manned and kept clean by our ground maintenance personnel on a 24-hour basis. Unfortunately, the drainage of one comfort room inside the parking area is presently being repaired by the NAIA engineering personnel.”

“The stench… comes from the building at the intersection of Imelda Avenue and the road leading to the arrival/departure areas. This building houses the lifting pump which is being used by NAIA to suck the sewage from the international passage terminal and discharge it to the drainage system.”

Regarding the airport’s hole-in-the-wall chichiria stalls commonly seen in squatter areas, Bonanza said that these not controlled by the parking concessionaire but by NAIA. He said these are illegal vendors and are outside the parking area his group is leasing.”

What the public wants is not explanations or excuses, but a clean, presentable parking area, with an efficient system of meeting arrivals and seeing off departing passengers. They know the problems — so why are they not doing anything?

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(First published in the Philippine STAR of September 17, 2000)

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