Philippines: Senators, DOE want fuel tax hike suspended

  • With global crude prices soaring to record levels, senators are pushing for immediate measures to cushion the impact on consumers, including suspending the second round of increases in excise taxes on petroleum set for 2019.
  • Under Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law, a suspension is implemented if or when Dubai oil prices – based on the Mean of Platts Singapore (MOPS) – average USD80 per barrel for three consecutive months before the next increase.
  • This means Filipinos would have to be burdened for three months or more before getting relief from a possible suspension, Sen. Joseph Victor Ejercito said on 2 Oct 18 as he urged the Department of Finance (DOF) to hold off imposing fuel excise tax.
  • Sen. Grace Poe urged the government to fully implement relief measures to protect consumers from possible abuses by petroleum companies.
  • She also called on the Department of Energy (DOE) to closely monitor pump prices at gasoline stations nationwide and ensure that oil firms are not engaged in profiteering and other abusive practices.
  • Sen. Sherwin Gatchalian said the government should be prepared for the possibility of Dubai crude hitting USD80 a barrel.
  • Sen. Paolo Benigno Aquino IV also called for close monitoring of the prices to allow the government to respond quickly.
  • But Filipinos may not find immediate relief from the trigger mechanism for the suspension of excise taxes on fuel, based on the TRAIN Law.
  • Based on Section 43 of the law, the DOF and the Development Budget Coordinating Committee would have to conduct a review first on the implementation of the excise taxes.
  • “Any suspension of the increase in excise tax shall not result in any reduction of the excise tax being imposed at the time of the suspension,” a portion of the section read.
  • This means a suspension – if one is recommended – will cover the next scheduled tax hikes, which will take effect on 1 Jan 19
  • A provision in the law allows an automatic suspension of taxes on fuel products when benchmark crude oil prices hit USD80 per barrel for a period of three months.
  • “The law requires it has to be three consecutive months… That would require legislative action. Otherwise we would have to wait for three months at that rate before you can suspend the effectivity of the second round,” DOE Assistant Secretary Pulido said.
  • On 1 Oct 18, the benchmark Brent reached a high of USD83.32, the highest level in almost four years amid supply concerns before US sanctions against Iran come into force in Nov 18.

External Link: