Senators urge gov't to suspend excise taxes on fuel

MANILA, Philippines – Senators on Friday, May 25, urged the government to suspend the imposition of excise taxes on fuel amid skyrocketing prices.

Senator Grace Poe, chairperson of the Senate committee on public services, said this was the initial recommendation of the panel after holding its first hearing on the effects of the tax reform law on utilities and transportation in Iloilo City on Friday, May 25.

Since the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law this year, the average price increase on fuel has been P8.07 per liter for gasoline, P8.95 for diesel and P9.15 per liter of kerosene.

“Hihilingin natin sa Department of Finance at sa ibang ahensya ng gobyerno na pag-aralang mabuti ang suspension ng excise taxes sa fuel dahil sa walang humpay na pagtaas ng presyo ng produktong petrolyo,” Senator Grace Poe said at the end of a public hearing of the Senate committee on public services in Iloilo City on Friday, May 25.

(We will ask the Department of Finance and other agencies to carefully study  the suspension of excise taxes on fuel because of the endless price increase of petroleum products.)

During the hearing, senators were told that pump prices in Panay island had already increased by 30% or at least P10 for diesel and gasoline since December last year. 

Consumer groups in Panay told the Senate panel that the TRAIN law, along with increasing fuel costs, caused an uptick in commodity prices.

They cited increased prices of rice (by P5 per kilo), pork (P15 per kilo) and fish (P20 per kilo) in the region.

Senators were also told that farmers had to fork an additional P2,600 a month, while a worker has to contend with an  additional P3,640 monthly following the implementation of the tax reform law.

Senator Paolo Benigno "Bam" Aquino IV, who filed the resolution for a Senate probe into the inflationary impact of the TRAIN law, reiterated his call for the  government to suspend excise taxes on fuel.

“Nalulunod na ang mga Pilipino sa taas ng presyo. Aantayin pa ba nila ang 2019? Hindi pa ba aaksyon ang pamahalaan (Filipinos are drowning in high prices. Will the government wait for 2019? Will they not take action now)?” Aquino asked. 

Aquino made the statement on Friday, after the Department of Energy (DOE) said that the TRAIN law has a provision for immediate suspension of excise taxes on petroleum products if prices become too high, this would only cover the additional excise tax due for 2019.

Senate President Pro Tempore Ralph Recto also took note of this provision. Recto said that accordinf to finance officials, the Department of Finance must first issue separate Implementing Rules and Regulations (IRR) for the suspension to take effect.

“Kung gaano kabilis mangolekta ang TRAIN, ganoon din dapat sa pagpreno kapag sobra nang bilis ang pagtaas ng presyo ng gasolina (If TRAIN’s collection is very fast, so too should pulling the brakes when gas prices are increasing rapidly),” Recto said. 

 BIR Revenue Regulations No. 2-2018, TRAIN law's IRR on petroleum products, stated that “for the period covering 2018 to 2020, the scheduled increase in the excise tax on fuel as imposed in this section shall be suspended when the average Dubai crude oil based on Mean of Platts Singapore (MOPS) for three (3) months prior to the scheduled increase of the month reaches or exceeds eighty dollars (USD80) per barrel.”

Recto also emphasized the weak peso against the US dollar and soaring prices of oil “form a volatile mix.”

“Kaya hindi lang oil price, tingnan rin pati ang strength of the peso, kasi kahit $50 lang ang presyo ng langis kung sisirit naman, halimbawa, ng P80 ang palitan ng piso sa dolyar, lolobo rin ang halaga ng gasolina,” Recto said.

(The strength of the peso must also be considered and not just fuel prices. For example, even if oil prices costs just $50, but say the peso would hit P80 to the dollar, gasoline prices would still jack up.)

Socioeconomic Planning Secretary Ernesto Pernia admitted that the price increases are alarming because “it’s quite abrupt,” but said that there are safeguards in place.

“There are already provisions like the pantawid pasada (subsidy for drivers) and also the unconditional cash transfer program. They just have to be speedily dispersed,” Pernia said.

However, he noted that the public has been used to lower inflation in recent years.

“We need to look at inflation in perspective. We used to hit double digits then, and now it’s much lower. We are just a bit more sensitive now,” Pernia said.

“Inflation is a complex matter that is beyond our control, dictated by world prices,” he added.— Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

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