ESCUDERO SAYS OIL TARIFF CUT A MOCKERY

Sen. Chiz Escudero today belittled President Arroyo's slashing by one percent the three percent tariff on oil "as a cut that doesn't quite make the cut in terms of cushioning the impact of high oil prices."

Escudero said the resulting drop in the pump prices of fuel - at an average 23 to 25 centavos per liter - "is a drop in the oil barrel."

Because Mrs. Arroyo "had dug her trenches" on the VAT issue, emphatically stating that the 12 percent levy on oil products will stay, "then she should have wiped out the whole three percent tariff on oil, " Escudero said

Arroyo, Escudero said, should have also expressed openness on the idea to totally scrap VAT on oil, or at the very least adopt a "sliding VAT rate for oil," which would ordain lower VAT rates when oil prices are on the rise.

"Malacanang's intransigence on this matter shows that the much ballyhooed oil summit is all for show. It will be a scripted monologue because government will only be talking to itself, "he said.

Escudero said the President should start thinking outside of the barrel if she so desires to provide an act of solidarity with the people who are reeling from expensive oil, he said.

"If the motive of reducing the tariff on oil is to signal the President's concern on rising oil prices, then it clearly fell short of its target , because a one percent cut, by any standard is unalloyed tokenism , " Escudero said.

He said the "math on oil would show that foregone revenues from the complete scrapping of the tariff on oil will be recouped by the government from the windfall in VAT she so dearly loves."

Escudero said the government should have adopted a lower trigger for the complete scuttling of the three percent oil tariff, which under the order Arroyo issued Tuesday will only be scrapped if Dubai crude hits $106 a barrel.

Escudero said the government's P54 billion projected take from VAT alone on crude oil and finished petroleum products was premised on an average $66 price of a barrel of Dubai crude.

The latter is now hovering at $93.

While Escudero admitted that the revenue forecast was anchored on a higher P46-48 to US$1 exchange, the rise, however, in oil prices has outpaced the surge of the peso which is now on the verge of breaching the 40 to a greenback rate.

Every $10 increase on the price of oil would increase VAT and tariff collection on by P6.2 billion a year, based on a P41-$1 rate and 276,500 barrels a day consumption, Escudero said.

"In the end, government is a winner. Its bottom line is secure, "he said.

"She should also address the oil shock problem from the demand side side, by making the government the paragon of energy conservation, by easing traffic in cities, as gridlock adds up to the national oil bill, by calling for surcharges on gas-guzzling luxury cars , by tapping renewable sources of energy that will displace fossil fuel , " Escudero ended.