Senators call to suspend excise tax on fuel; Drilon says government can do it right now

MANILA, Philippines — Senate Minority Leader Franklin Drilon said Tuesday that there is no legal obstacle to the finance department and Bureau of Internal Revenue to suspending the collection of fuel excise taxes amid the sustained increase in local oil prices due to tight global supply.

For him, the intent of the Tax Reform for Acceleration and Inclusion (TRAIN) Act is to give the government the power to address possible inflation. Under the TRAIN law, the excise tax for gasoline now stands at P10 per liter, P6 per liter for diesel, and P5 per liter for kerosene. 

"There is no stopping the executive, specifically the Department of Finance and the Bureau of Internal Revenue, from suspending the collection of excise taxes on petroleum products, if they really want to mitigate the impact of high oil prices on the cost of goods and living expenses of the ordinary Filipino," Drilon said in a statement on Tuesday.

The lawmaker said the TRAIN law is meant to give the state the authority to arrest possible inflation, benefitting both the economy and consumers. 

He also said that TRAIN law provision on excise taxes "should be interpreted liberally, not just in light of suspending the increases in excise taxes but also its imposition."

"We are in an extraordinary situation. It is a situation which calls for the liberal application of the law and for compassion," he said.

"We are not seeking an exemption from taxes here and therefore a strict construction of the law is misplaced. Filipinos are suffering. The burden should be borne by the government. The government cannot just stand and hide behind the law to say that there is nothing that can be done," Drilon added.

Under the law, the petroleum excise taxes can only be halted if the average price of Dubai crude hits or exceeds $80 over a three-month average,

Several domestic oil companies raised pump prices for the tenth consecutive week, registering the largest increases to date, since the start of the year. The tight oil supply was partly driven by the geopolitical war between Ukraine and Russia.

This week, gasoline prices at home climbed by P3.60 per liter; diesel went up by P5.85 per liter; and kerosene rose by P4.10 per liter.

Calls to suspend fuel excise taxes

Senate Majority Leader Juan Miguel Zubiri joined the calls of other senators and groups urging the government to hold off on collecting fuel excise taxes as a short-term solution to rising fuel prices.

"We need to think long-term, to avoid coming to another situation like this in the future. So long as we are dependent on foreign oil, our prices will be dependent on the very volatile international arena as well. That is why we must strengthen our local alternative fuel sources, like biodiesel and bioethanol, which can be produced in the country," Zubiri, who authored the Biofuels Act of 2006, said in a statement on Tuesday.

For Sen. Sherwin "Win" Gatchalian, who chairs the Senate energy committee, suspending fuel excise taxes should be the "last resort" if fuel prices remain high in the coming months. 

Sen. Imee Marcos meanwhile said that disbursing fuel subsidies and 'ayuda' (aid) for affected sectors would bring quicker relief than suspending excise taxes.

Some P18 billion worth in programs earmarked in the P20-billion Calamity Fund can still be "re-prioritized" for fuel subsidies, she said. 

"This can be done more quickly than suspending fuel excise taxes, which will have to go through a long legislative process," Marcos, who chairs the Senate economic affairs committee, said in a statement on Tuesday.

Speaking on behalf of her colleagues, she said that lawmakers are ready to "forego the remainder of their recess if President [Rodrigo] Duterte calls for a special session of Congress to amend or create new laws amid the global oil crisis."

Duterte has yet to make such a call.