The Philippines will lower its oil import tariff to mitigate the impact of high world crude prices but has ruled out suspending a higher sales tax on energy products to keep its fiscal reform program on track.
"What we have looked at and decided is the tariff adjustment, as prices of crude increase, we can allow for an adjustment, that's a reduction in the tariff duty on crude," Finance Secretary Margarito Teves told reporters.
"It's a sliding scale formula, in other words, if the price of crude oil is at a certain level, we can adjust this by one percentage point. If it still goes up to another level, we can adjust it to two percentage points."
The poor Southeast Asian country, which imports nearly all its daily oil requirement of 330,000 barrels of oil per day, currently has an import tariff of 3 percent.
Teves has previously said that suspending or lowering the oil import tariff would cost the government roughly 3 billion (€466 million) pesos to 12 billion pesos in revenues.
With oil around $73 per barrel, the Philippine government has come under pressure to act over crippling energy costs but Teves said relief measures would not include temporarily lifting a higher value-added tax (VAT) on oil products.
The VAT is the centerpiece of President Gloria Macapagal Arroyo's efforts to raise revenues, increase much-needed expenditure on infrastructure and reduce borrowing costs on the country's $76 billion debt.
The VAT on oil products was expected to raise 30-35 billion pesos, or 40 percent of the estimated 75 billion pesos additional revenue from the higher tax this year.
Tim Condon, head of Asian financial market research at ING, said on Tuesday any move on the import tariff would be revenue neutral.