A bill filed in the lower house seeks to lower the excise tax collected on fuel products, principally diesel, kerosene and LPG—which are used by middle to low- income consumers—to provide them relief from the losses they incurred during the pandemic.
The continued increase in fuel prices, particularly of products consumed most by the middle and lower classes, have been adding financial drain to their already tight budgets, which is why Rep. Jose Ma. Clemente Salceda filed a bill to provide “immediate relief” to consumers from rising global oil prices.
Salceda’s bill, House Bill 10438 seeks to lower excise taxes on fuel products for six months, including zero tax for diesel with the revenues to be forgone by the government at over P55 billion.
Once enacted, the law would exempt diesel and kerosene from excise tax and would reduce the charge on gasoline to P7 per liter from P10. The excise rate was set by the Tax Reform for Acceleration and Inclusion (TRAIN) Law and is enforce between Dec. 1, 2021 and June 1, 2022.
Republic Act No. 10963 or the TRAIN Law raised excise tax on fuel in three tranches from 2018 to 2020. These rates are now at P10/L for gasoline, P6/L for diesel, P5/L for kerosene, and P3/L for liquefied petroleum gas.
Salceda argued that “diesel being a poor man’s transport affects mostly the tricycle, motorcycle delivery riders, farmers and jeepney drivers who use this fuel. I believe that the biggest reduction should be on these commodities,” he said.
The bill also would require oil companies to notify the Department of Energy and the Department of Finance (DoF) of changes in retail price due to the decrease in excise tax and future price changes before the measure lapses to ensure that the reduction is properly reflected in prices at the pump, according to a BusinessWorld report.
It also gives the two agencies the power to conduct investigations should any irregular price movements are detected.
Earlier, the National Economic and Development Authority opposed the proposal of a consumer group to suspend the collection of excise taxes on fuel products to ease the burdens of consumers, hit hard by the pandemic. (see: NEDA bucks stopping oil excise tax to prevent inflation uptick )
But the Laban Konsyumer, headed by Victorio Mario Dimagiba, said suspending the excise tax will provide relief to many sectors amid the pandemic. Besides suspending the excise tax is in line wit6h Presidential Proclamation 1218, which allows the national government to monitor and control prices of necessities and prime commodities.
He said suspending excise taxes of P10 for gasoline, P6 for diesel and kerosene and P3 for liquified petroleum gas is a “big assistance to mitigate unavoidable pass on costs of goods and services to all sectors.”
With oil prices hitting $80 per barrel, suspending provisions of the TRAIN Law may not be necessary to keep inflation at bay, NEDA Secretary Karl Kendrick Chua said.
The TRAIN law allowed for suspending the scheduled increase when the average Dubai crude oil based on Mean of Platts Singapore reaches at least $80 per barrel.
“The $80 (per barrel of crude) mark was an ‘alert level.’ We are past that level. The Mean of Platts Singapore price for crude is now over $84. We should really take up a reduction in the excise tax,” he said in a statement.
Salceda estimated foregone revenue due to the proposed law at P55.04 billion, less than the P131.4 billion projected by the DoF if all excise taxes are suspended.
“These losses will be partly offset by increases in VAT collections due to rising prices, which would be around P19.01 billion from these three products. The net decline in fuel tax collections will be around P36.03 billion,” he added.
He said the measure will help bring down inflation by about 0.4 to 0.6 percentage points.
On Tuesday oil companies raised the price of gasoline by P1.15 per liter while diesel and kerosene prices fell by P0.35 and P0.30 respectively.
As of Oct. 26, pump prices in the year to date for gasoline and diesel have increased by P20.80 per liter and P18.45 respectively, according to the Energy department.
Tags: #excisetaxes, #reliefforconsumers, #HouseofRepresentatives, #economy