The Unlawyer

[UPDATE: Learn more about May 2008, June 2008, and July 2008 Philippine gas prices - Ed.]

Philippine lawmakers, egged on by popular demand, are thinking of repealing the 12 percent value-added tax (VAT) on finished petroleum products such as gasoline and diesel in order to give relief from the impact of high oil prices. Officials of the International Monetary Fund (IMF), on the other hand, are dissuading them from what they think is a rash act:

“Reza Baqir, IMF resident representative to the Philippines, said lifting the VAT on oil would only benefit mostly wealthier families because they were the ones who consume more petroleum products.

“What the government should do was to use the revenues from the imposition of the VAT on oil to fund more social services for the masses, the official said.

“Our analysis has shown that the poor are better protected by increasing social spending than reducing energy taxes. This is so because the benefits of social spending are better targeted at the poor than those of reducing gasoline taxes,” Baqir pointed out.”

A proponent of repealing the VAT on gas and oil spoke up and reiterated the need for such an act:

“Sen. Mar Roxas II made this warning Sunday, citing projections by Morgan Stanley Inc. that oil could hit $115 per barrel soon. He used the projection to press his point about suspending the expanded value-added tax on petroleum products, saying the forgone revenue can be partly recouped when people spend the money they can save from the E-VAT lifting to buy other essentials that are themselves VAT-covered.

““The question now really is, whether the government should continue collecting VAT on oil products. Or if the tax should be suspended to allow our people—consumers—to keep more money in their pockets at this time of abnormally high oil prices?””

The Philippine government relies heavily on indirect taxes like the VAT for a significant chunk of its revenues, in part because of difficulties in raising a consistent cash flow from income and other direct taxes.

At any rate, crude oil prices are forecast to decline as a result of fears of a US economic recession and a slowdown elsewhere.

Many believe that speculators are partly responsible for the reason why crude oil prices are so high, as investors believe that oil – crude oil futures, that is – is a good hedge against a weakening US dollar. So is the solution as simple as stopping the erosion of the greenback’s value? Read the CBS Marketwatch article I linked to and find out why it isn’t as simple as that.

At any rate, many also believe that the only way to prevent these investors from betting further on the price of oil is to ban such trades:

“But voices as varied as those of Mohammad Alipour-Jeddi, the head of market analysis for OPEC, and William F. Galvin, the secretary of state in Massachusetts, have blamed speculators for rising prices. “There is enough crude in the markets,” Mr. Alipour-Jeddi said Monday. Bottlenecks in refining and “speculative activities” are forcing prices higher, he said.”

Rethinking Markets inquires if banning oil speculation is such a good thing after all.

Elsewhere, two stories of poor customer service made news in the Philippine blogosphere. First, from Ajay’s Writings on the Wall comes this tale of how a journalist’s teenaged daughter was bitten by snake, fortunately a non-poisonous species, at a Pasig City private zoo. Second, courtesy of the PFSG Forums, is a blogger’s report on how an airline treated him and his fellow airline passengers after their flight to Manila was cancelled.

Of these two, the snake bite story is by far the worst – and garnered the most attention from Philippine bloggers – because the incident revealed that the zoo’s operators apparently did not possess adequate facilities to deal with injuries at this location, nor did the zoo’s employees assigned to this site, incredibly enough, have an intimate knowledge of the animals in their care.

It would be interesting to hear what that zoo’s management has to say.

The Call Center Blogger says: Pagerank, what’s that? Quare Verum, a 12-year government service veteran, dispenses some advice for people who want to follow his path.