Senators to refile bill on suspension of fuel tax

MANILA, Philippines — Two senators are set to refile their bills seeking a temporary halt to the collection of excise tax on oil products to temper increases in pump prices and ease the burden of Filipinos.

Senators Grace Poe and Aquilino Pimentel III vowed to reintroduce their proposed measures to suspend oil excise tax collection as fuel pump prices continue to rise.

On Monday, president-elect Ferdinand Marcos Jr. thumbed down calls for the suspension of fuel excise tax, saying he would rather take steps to immediately help sectors most affected by skyrocketing prices.

Poe said suspending oil excise taxes would bring instant relief to the public by lowering the prices of fuel products, and eventually the costs of goods and services.

“To our people in daily survival mode, the oil tax reprieve will provide a crucial lifeline,” Poe said.

“The revenues the government will generate from the excise tax to fund cash aid might come too late for families who have nothing to eat now,” she said.

Pimentel, for his part, said while the movement of prices of crude in the world market is beyond the country’s control, the government still has some say on pricing once petroleum products reach the local depot.

Poe’s bill proposes to amend Section 148 of the National Internal Revenue Code to provide for the automatic suspension of the excise tax on regular gasoline, unleaded premium gasoline and diesel when the average Dubai crude oil based on Mean of Platts Singapore for three months prior to the scheduled increase for the month reaches or exceeds $80 per barrel.

The senator said the bill would be among the pieces of legislation that she intends to re-introduce when the 19th Congress convenes in July.

Local taxes add substantial costs to the already high prices of fuel in the world market, she said.

Pursuant to the Tax Reform for Acceleration and Inclusion (TRAIN) law, the excise tax on regular and unleaded premium gasoline is currently set at P10 per liter of volume capacity. The excise tax on diesel is pegged at P6 per liter. A value-added tax of 12 percent is also imposed on the sale of gasoline and diesel.

The suspension of the excise tax would immediately bring down costs by P10 per liter for gasoline and P6 per liter for diesel, Poe said.

The authority granted under the TRAIN law to suspend the collection of excise tax was transitory and covered only the years 2018 to 2020.

“If the government is willing to spend billions in cash assistance to targeted beneficiaries, then it should also be ready to forego a portion of its revenues during the most critical times in order to save millions of lives,” Poe said.

“We hope that this call on excise tax suspension, which is becoming louder by the day, will merit serious consideration from the incoming administration,” she said.

To help ease the impact of rising oil prices, Poe earlier urged government agencies to effectively implement a Civil Service Commission resolution allowing a flexible work arrangement for government employees without sacrificing prompt and quality public service.

Price fluctuations

At a Senate hearing yesterday, Department of Energy (DOE) Undersecretary Gerardo Erguiza said Filipino motorists may have to live with high or fluctuating fuel prices for the rest of the year as factors that caused the phenomenon like the Russia-Ukraine war and the continued weakening of the peso are expected to linger.

“We have the Russia-Ukraine, the commitments of OPEC (Organization of Petroleum Exporting Countries), the US not doing its production that much also. There’s the problem in Iran. In Libya…there’s a political crisis and it decreased its production by 100,000 barrels. Venezuela, which is projected to have the largest reserve in the world, is still not bringing its production to the market. The lockdown in China again …(but) when it comes back the demand will again increase,” he said.

As an example of the price fluctuation, the DOE official cited the more than $7 per barrel drop in global oil prices at the start of the week.

“But there’s an indication that it’s going back again. It’s a matter of fluctuation up and down,” Erguiza said.

The DOE official also cited the peso’s depreciation to the P54-level against the dollar.

“We are buying oil using the dollar,” he said, which means it would be more expensive for the country to import oil.

Also at the hearing, Cleanfuel Group of Companies president Jesus Suntay said he sees local pump prices hovering around P80-90 per liter. – Danessa Rivera