MBC Research forecasts gas prices to go up 6%

1 September 2005 - Makati Business Club Research projects that gasoline prices will rise by 5% to 10% per liter, with the exception of diesel fuel which will increase marginally by less than 2%, once the new Expanded VAT law goes into effect.

Under the new law, Value-Added Tax will be applied to all fuels in exchange for a reduction in excise taxes and an import duty decrease from 5%to 3%. Excise taxes for diesel and kerosene will be reduced to zero once EVAT takes effect while excise taxes on LPG will remain at zero, its current rate.

Following the adjustments on taxes, prices for premium unleaded fuel are expected to rise by about 6.6% while prices for regular should rise by approximately 5.0%. Kerosene prices will jump 5.5%. Diesel prices will rise marginally by 1.8%. Prices for liquefied petroleum gas (LPG) used for cooking will increase 10%.

Assuming fuel consumption remains the same, the government can expect to raise over P100 billion on an annualized basis from a combination of EVAT, and the reduction in excise taxes, and import duties. Given today's high prices of fuel, however, fuel sales have dropped 7.3% for the first half of the year.