Gov’t can slap windfall tax on oil firms, says JPE

The government is not helpless amid the series of increases in fuel prices and can address perceived abuses by oil companies, especially if they’re “over-charging” the public, Senate President Juan Ponce Enrile said yesterday.

“If they’re over-charging the public, the government is empowered to impose a windfall tax on them,” the upper chamber leader, who is a known tax lawyer, pointed out.

Some senators have called on Malacanang to appeal to oil companies to consider a moratorium, even in the meantime, in effecting price increases.

Their call was in the light of the admission made by presidential spokesman Edwin Lacierda that the government is helpless in arresting new price hikes as these are brought about by market forces.

The Palace countered that it is not exactly helpless but appears so in its

suggestion that the public should reduce fuel use to lessen the impact of high prices on them.

Deputy spokesperson Abigail Valte said there is nothing wrong in conserving on oil use while the government undertake measures such as meeting with leaders of transport groups to hear their concerns over the unabated oil price increases.

“There is nothing wrong in cutting down on fuel use, the government is also affected and saves on its fuel consumption, it would not do harm if we tighten our belts under the situation,” she said.

Valte issued the statement in response to Senator Sergio Osmeña’s claim that conservation in the use of energy, electric lights, gas, diesel and LPG is the only solution amidst the continuous increase in oil prices because even the Palace cannot do anything about it.

The Senate leader said that while prices of imported fuel in the world market may be “beyond our control” and government cannot compel the private oil companies to subsidize in order to keep local oil prices at reasonable levels, “we can tax inordinate profits.

“They can be the subject of excess profit,” he said.

“I am not familiar with the world market… the price of our fuel is dictated by supply and demand of the world, outside of our country, we do not have control on that. You do not expect the system to subsidize the public; that is a function of government if it plans to subsidize and go bankrupt but you cannot compel the private sector to subsidize the public.

“All you can do is to impose taxes on them. If they are making inordinate profits, if you quantify the reasonable profits that they should make and if they exceed that, then the excess should be subjected to excise profits tax,” he added.

In doing so, it would mean opening up the books of the oil companies, Enrile said.

It is for this reason that he is pushing the early passage of an Anti-Trust Law to cover the deregulated oil industry.

This, he said, could be an instrument by the government in compelling the books of accounts of some businesses taking advantage of its consumers.

The Senate President lamented that the oil firms were virtually allowed to rake in excess profits under the deregulated environment which prevents government interference.

He noted that the oil deregulation law was enacted by the previous Congress lifting the previous system set in place during the time of former President Marcos to check runaway oil prices.

“When (former President Fidel) Ramos, sold Petron, we lost an instrument to check what is really happening in the oil industry,” Enrile added, partly in Pilipino.

“It would have been better if we kept that instrument (Petron), that company was formed by the government for that purpose but some of the presidents we had failed to comprehend its purpose.”

As of now, there is still no confirmation on the details and on the date of the meeting of President Aquino with members of the transport sector. Earlier, Valte said the Department of Energy (DOE) would be the lead coordinator for the meeting and the Palace is waiting for the details and confirmation of the date of the meeting.

It was earlier noted that the proponents of the dialogue wanted the meeting to take place next week just before President Aquino embarks on his official trips to the United States and Japan, Valte said, adding the DOE is already checking the President’s schedule.

She also said the details of the meeting are not yet final. “Of course, we have an idea of what the transport groups will raise to the attention of the President,” she said. Danessa O. Rivera,Angie M. Rosales, Daily Tribune