Over the past couple of weeks, the price of fuel has tumbled to its lowest in over a decade, thanks to the current pandemic and overproduction. While demand is low, and possibly to discourage the private sector from traveling, the Philippine Government will be adding a 10% tariff on fuels to help fund its COVID-19 response.
The new tariff was announced by President Rodrigo Duterte last May 2, 2020. Executive Order 113, which imposes a 10% tax on refined and imported crude oil products, takes effect immediately.
“There is an urgent need to augment the government’s resources to sufficiently finance the programs and measures to mitigate the effects of the coronavirus situation, and launch the country towards recovery and rehabilitation,” said President Duterte on the signing of EO 113.
Will we pay more?
The additional 10% tariff (exact monetary value based on imported product's unit price) will can help the Philippine government raise income. This is to be placed on top of the existing 3% tax on importation. Local petroleum companies are expected to shoulder the added cost and provide an added source of funding for the country.
Naturally, this will affect pump prices, but not immediately. Crude oil futures have been hovering at really low prices; even going down to negative a few weeks back. The implementation of the added tax is also only temporary. It will stay until such time that the modified rates of importation duty revert back to 0, or the President’s emergency powers cease to take effect.
As for consumers, the price of fuel at gas stations shouldn’t be affected yet. There should still be a good supply of petroleum following the sharp decrease in demand due to the quarantine. The tariff will only affect incoming shipments when local petroleum companies need to import more. By then, we may see an adjustment in prices.