Metro Manila, Philippines – Senator Sherwin Gatchalian has raised the possibility of imposing a windfall levy or taxing oil companies extra for excessive profits arising from the price surge triggered by the Middle East crisis.
Gatchalian, chairman of the Senate ad hoc committee on the government crisis response, rejected some oil companies’ argument that they need to sell existing stocks at higher or replacement cost to sustain cash flow for future supplies.
“Ako, I don’t agree with that dahil nga unang-una, lumang imbentaryo yan. So dapat gamitin mo yung tinatawag na first in, first out. Kung ano yung luma yun ang ilabas mo,” he said in a chance interview on Thursday, March 26.
[Translation: I don’t agree with that because, first of all, those are old inventories. You should follow the principle of first in, first out—what’s older should be sold first.]
He pointed to a gap in the oil deregulation law, which allows oil companies to set market-driven prices for fuel without government intervention.
“Kaya isa sa mga pinag-iisipan namin, kung ayaw nyo pakita, mag-iimpose na lang kami ng tinatawag na windfall tax. Itong konsepto na ito, pinag-uusapan yun sa ibang bansa kasi nakikita nila na may mga companies, oil companies abroad and also here na malaki ang kikitain dahil ang bilis ng taas eh,” Gatchalian said.
[Translation: One of the options we’re considering is this: if you refuse to disclose, then we will impose what is called a windfall tax. This concept is being discussed in other countries because they see that some companies—oil companies abroad and even here—stand to earn significantly due to the rapid price increases.]
The senator said a provision allowing the suspension of the fuel excise tax requires oil companies to submit to the Department of Energy a breakdown of the cost components of petroleum products.
“So dito natin makikita ngayon kung magkano talaga ang kikitain nila o kinikita nila ngayon. At kung nakita ng gobyerno na labis-labis, sobra-sobra, doon tayo pwede magpasok ng windfall tax,” Gatchalian explained.
“Ang kutob ko, imposible walang labis ang kita dito,” he added.
[Translation: This is where we will see how much they are really earning. And if the government finds that the profits are excessive, that’s when we can introduce a windfall tax… I have a strong sense that it’s impossible for there to be no excess profits here.]
Gatchalian said the Philippine Competition Commission is also looking into allegations of hoarding, profiteering, and other possible violations.
Fuel prices have surged week after week following the outbreak of war in the Middle East on Feb. 28, which led to the closure of the Strait of Hormuz, a major route for crude oil and petroleum products. The Philippines has since declared a state of national energy emergency amid soaring prices and uncertain future supply.
