DoE: Suspending taxes on fuel up to Congress

DoE: Suspending taxes on fuel up to Congress | Daily Tribune

Amid the calls to suspend the value-added tax (VAT) and excise tax on petroleum products due to the rising oil prices, the Department of Energy (DoE) said it is legally prevented from doing so even if it wants to.

DoE Officer in Charge Undersecretary Sharon Garin said in a briefing the agency has no authority to override the laws imposing taxes on fuel.

“The excise tax and the value-added tax which is 12 percent are imposed because of a law. That is legislation, so the DoE cannot go against what is mandated by law, nor can the (Department of Finance), nor even the President. So you really have to follow what is in the law,” Garin said.

While the DoE may suspend an increase in the excise tax, Garin said currently there was no increase scheduled.

“The only thing that is allowed is to suspend the increase. We are not increasing anything. But however willing the Cabinet may be, it’s not allowed by law. It will have to be an act of Congress. An amendment to the current law is needed to either suspend, lower or even abolish the taxes on fuel,” she explained.

Garin pointed out that the revenue from fuel taxes amounts to around P300 billion a year — money that funds infrastructure, education, and health programs.

“If we do away with the P300 billion, that’s how many kilometers of roads, how many school buildings, health services — it will result in a reduction in the government budget. So it’s a balance that the administration is trying to find to protect the commuting public, but the basic service should also go on. That’s why the ayuda might be a good start for now,” she said.

The government is ready to provide financial aid to the sectors that are most vulnerable to oil price hikes, especially if the tensions in the Middle East escalate further.

Under the current policy, the DoE will notify other agencies to begin the aid rollout if global crude prices breach the $80 per barrel threshold.

Garin said the final amount of assistance will depend on the input from relevant agencies such as the Department of Transportation (DoTr) and Department of Agriculture (DA).

“There is no definite amount yet; the only thing definite is the P2.5 billion for the subsidy for [public utility vehicles]. But the individual distribution, on how much each recipient will receive, depends on who will receive and how many will benefit,” she said.

“Currently, the DoE, DA and DoTr are meeting and the DoTr is hard at work determining the number of recipients, who will actually receive, but I think the DoTr already identified them and they’re just finishing up the listing, I guess. But as announced by the DoTr, they are ready to disburse anytime the signal is given,” she said.

The DoE is also preparing for a scenario where the country’s fuel supply is severely disrupted, which could trigger another spike in prices.

“There are options to do that. Right now, we have long-term options, but there are options also to find other suppliers, find other routes for our supply. But the economic team has calmed down because they’ve seen that there’s a lowering of the prices. So we’ve been instructed to just prepare as usual, like if we’re going to break the $80 limit,” Garin said.