Aquino: Suspension of fuel tax in 2019 'too little, too late'

MANILA, Philippines — Suspending the excise tax on fuel in 2019, as Malacañang suggests, will be too late, Senator Paolo Benigno “Bam” Aquino IV said on Wednesday as he urged the Senate to amend the tax reform law to put more safeguards against its inflationary effects.

Malacañang on Tuesday said that it was open to the suspension of increased excise taxes on diesel, liquefied petroleum gas, kerosene and bunker fuel used to produce electricity amid concerns over the continuous increase in the prices of goods and services.

Aquino said that suspending the taxes in 2019 would be “too little, too late” as he urged more measures to help ordinary Filipinos better cope with rising inflation.

“Poor Filipinos should be protected from TRAIN (Tax Reform for Acceleration and Inclusion Law) and rising prices of goods. Our countrymen are already drowning in these price increases,” the opposition senator said in a statement.

The Liberal Party senator urged his colleagues in Congress to pass Senate Bill 1798 into law, which would bring a safeguard mechanism in the TRAN law based on the government’s inflation target range and allow the suspension of its excise taxes on fuel.

Under the bill, the collection of fuel excise taxes would be suspended if inflation exceeds official targets for three consecutive months.

Inflation in April accelerated to 4.5 percent, which is the fastest in five years. This pushed the year-to-date inflation to 4.1 percent, above the 2 to 4 percent target of the Banko Sentral ng Pilipinas (Central Bank of the Philippines).

The International Monetary Fund estimated that the country’s inflation rate for 2018 would be at 4.2 percent before easing to 3.8 percent next year.

“While debates on the causes of rising prices continue, our countrymen are looking for solutions, not reasons, not debate, but answers to their problems,” Aquino said in his privileged speech at the Senate floor on Wednesday.

Aside from the suspension of the collection of excise taxes, Aquino stressed the importance of fully rolling out the government’s cash transfer program for poor Filipinos.

He said that since the start of this year, only 2.6 million families have received monthly cash transfers, out of the target of 10 million households.

He also supported the proposal of Sen. Sherwin Gatchalian to increase the financial aid to the poor, from P200 to between P400 to P450.

The government should also address the rising prices of rice and the dwindling supply of cheap grains in the market.

His third proposal was the inflation-based suspension of the law’s additional petrol taxes.

“What we need is a safeguard ...  which is responsive to the surges in prices and the needs of our countrymen,” he said.

He also dismissed fears that the suspension of fuel taxes would result in lack of funds for the government’s infrastructure program, social services and educational subsidy.

“In reality, this is not true. If you think of it, our target collection of excise tax under the TRAIN law is only P70 billion. This is far from the total budget for 2019,” he said.

Congress is currently deliberating on the next package of the tax reform law. The government said that passing that measures was necessary to ensure that there were enough funds to finance its ambitious infrastructure and social services program.