The oil subsidy for the public jeeps and tricycles, while a product of peoples protests, is of course not enough to mitigate the impact of weekly oil price hikes. There are bigger benefits and more beneficiaries if the government scraps the 12% VAT on oil altogether.
This can result in a price reduction of P5-6.00/liter and the beneficiaries will not just be the drivers but also households, fisherfolk and many others. The P500 million government allotment for the subsidy is also small compared to the windfall revenues government is raking from the VAT on oil. Some estimates place this at P4 billion for the first quarter of 2011.
The subsidy also does not check the alleged overpricing committed by the oil companies. Bayan has estimated this to be P7.50 per liter. The subsidy also does not protect consumers from price speculation which has resulted in steep prices.
It’s just not right for government to be benefiting as it is from the misery of the people. This is how the VAT on oil operates. People suffer from high oil prices and government earns windfall revenues from overpriced petroleum products. It is for this reason that the VAT is oppressive and should be removed to provide immediate relief.
Overpricing and price speculation should also be addressed. To do this, the oil deregulation law should be scrapped.