BY REGINA BENGCO

FINANCE Secretary Margarito Teves yesterday said the tariff on oil imports would be brought down to zero on June 1 following the rise of global oil price to $135 per barrel on Thursday.

Don't expect any immediate lowering of prices, he said.

The zero tariff will not immediately result in lower pump prices because some companies still have recoveries, he said.

Eventually, he said, prices would have to increase.

Oil was trading at $132 per barrel yesterday.

"Kasi tumataas din ang presyo, wala tayong magagawa doon. Ang kapalit niyan, we'll find a way of re-channelling whatever additional resources that the government has collected back to the sectors that were affected. Yun ang plano," he said.

Oil companies are expected to raise prices again this weekend. Since the start of the year, the oil firms have raised prices nine times, bringing the price of gasoline to a record high of at least P51 a liter.

Oil firms have said they are eyeing a recovery amount of P7 a liter to stop losses due to skyrocketing world crude prices.

The energy department earlier this week said price triggers for the zero tariff were breached during the first two weeks of the month.

The current tariff is 1 percent. Last January, Malacañang effected a 1 percentage point reduction (to 2 percent from 3 percent) on the tariff on oil as an alternative to calls for suspending the 12 percent value-added tax on oil or scrapping the oil deregulation law.

The Palace has said suspending the VAT would result in a P60 billion revenue loss and lower credit ratings.

Teves said the current value of the peso (P43.42 to a dollar) is still within the P42-P45 peg for the 2008 national budget.

He said the deterioration of the peso to more than P43 to the dollar helps the exporters and the overseas Filipino workers but government will have to pay more interest for its debts.

He said the lower peso value also improves Customs collections because taxes are collected based on the peso equivalent of the imported item.

He said what government is watching out for is the effect of the peso on the gross domestic product because a lower GDP would affect the overall revenue collection.

He said deterioration would initially be inflationary and would result in higher tax collection.

"We will know in the next semester, because it may already have an effect on our economy. But we don't know to what extent yet," he said.

But he said government has to look at the assumptions associated with the economic projections because both the inflation and interest rates are now higher than the assumption.