THE MOUNTAINEER

Need of the hour:Price control
EDISON L. BADDAL

BONTOC, Mountain Province -- The unmitigated increase in the price of oil, which hit $138.50 recently in the world market due to the standoff between the US and other military powers and intransigent Iran, has created a detrimental effect on economies of nations that are dependent on fossil fuel to run their industries. The Philippines is among the foremost users of fossil fuel as it is the major source of the country’s electric power to operate its fledgling industries.

Hence, any hike in the price of oil in the world market inexorably precipitates an increase in the price of local oil supply. Due to the recent, abrupt oil price hike, President Gloria Macapagal-Arroyo enjoined all public and private agencies to adopt fuel and electricity-saving measures. She initiated this as an austerity measure even as it is an indispensable policy to preserve the gains that the economy registered in the preceding year. She directed officials in the Visayas and Mindanao regions to observe such measure being the major users and consumers of fossil fuel in the country.

On the other hand, the oil price hike triggered an increase in the prices of basic necessities and prime commodities. The basic necessities include among others rice, corn, bread, fresh and canned fish and other marine products. Those listed as prime commodities are fresh fruits, flour, processed and canned pork, beef and poultry meat and others.

The increases in the price of oil and commodities upped the inflation rate of the country which precipitately climbed to 10.2% in June. This is a marked increase from 9.6% in May and more so on the average 8.3% registered for the first four months of the year. The price increases in oil and commodities exacerbated the woes of the poor, who are always at the receiving end of any slight or grave aberration in the economy, even as there is still a shortage in the supply of the government-subsidized NFA rice.

In a show of uncommon political shrewdness, GMA forestalled any untoward backlash from the affected hoi polloi when she handed a cash subsidy of 500 pesos to identified 4 million poor families from the urban poor. Though given as a one-time subsidy, this goes a long way in cushioning even just a little of the harsh effect of the untenable increase in electric rates in light of the continued oil price hikes.

This was given to those consuming a lifeline rate of 100 kwh and below from the 12 billion collection from VAT in 2007.In a way, it is a share of the poor from the fruits of the VAT. Topping GMA’s knee-jerk poverty reduction measure is the grant of personal tax exemptions to at least 500,000 wage earners in both private and public agencies by RA 9504 which was signed into law by PGMA on June 17,1008. The law also increased the amount of personal exemptions of individual taxpayers from 20,000 to 50,000 pesos.

Other benefit is the increase in the additional exemption of each of the four dependent of an individual taxpayer from 8,000 pesos to 25,000 pesos. It also allows the use of the so-called Optional Standard Deduction (OSD) method by the self-employed, professionals and the medium,small and micro entrepreneurs when they file their income tax returns. This system allows the latter to declare at least 40% of their gross sales or receipts as taxable income for a given period. These grants, albeit palliative measures, translate into bigger budget for food and other necessities for poor families.

It cannot be denied that such bold and prudent moves by PGMA scuttled a budding social upheaval of that may worsen to cataclysmic proportion given the fact that any country’s political history is more often the result of the violent, uncontrollable eruption of the repressed sentiments of the masses once its acrimony due to poverty has reached its irreversible acme.

In the light of the unmitigated increase in the price of oil and commodities, there is a need to rein in further increase in order to avert a galloping inflation rate from ensuing. Under such worst scenario, widespread famine will not be far behind. In this wake, there is a need to revisit the provisions of RA No. 7581, aka the Price Act.

This law provides protection to consumers by stabilizing the prices of basic commodities even as it prescribes measures against undue price increases during emergency and like situations. It iterated the state policy “of ensuring the availability of basic necessities and prime commodities at reasonable prices at all times without denying legitimate business a fair return on investment.”

It further aims “to provide effective and sufficient protection to consumers against hoarding, profiteering and cartels with respect to the supply, distribution, marketing and pricing of aforesaid goods, especially during periods of calamity, emergency, widespread illegal price manipulation and similar situations.”