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Senators: Halt fuel price hikes

The imposition of VAT and the increased excise taxes on petroleum products and coal are too much of a burden on the consumers and businesses during this time of the Covid-19 pandemic



Two senators on Tuesday filed separate bills calling for congressional intervention to reduce the domestic prices of petroleum products.

In filing Senate Bill 2445, Senator Grace Poe urged for the “automatic” suspension of the excise taxes on petroleum products, noting that doing so will immediately bring down the cost of gasoline by P10 per liter and P6 per liter for diesel.

“The rising cost of fuel is certain to have a spillover effect on the cost of other products, especially food which accounts for a big chunk of a household’s expenses. Such will aggravate poverty and hunger among our people. If the government cannot substantially provide for its people, then at the very least, it must do all it can to ease their burden,” the Senator said in a statement.

Her proposed measure also seeks to amend Section 148 of the National Internal Revenue Code by allowing the suspension of excise taxes on regular gasoline, unleaded premium gasoline, and diesel.

The Tax Reform for Acceleration and Inclusion (TRAIN) law allowed for the suspension of the scheduled increase in the excise tax on fuel when the three-month average Dubai crude oil prices based on the Mean of Platts Singapore hits $80 per barrel or more.

The suspension, however, is only for the years 2018 to 2020 and requires the Department of Finance (DoF) to conduct an annual review of the implementation of the excise tax on fuel based on projections and recommendations of the Development Budget and Coordination Committee (DBCC), but it also requires that the suspension should not result in any reduction of the excise tax being imposed at the time.

The DoF had said the government stands to lose P131 billion from the suspension of the excise tax on gasoline and diesel, P24.7 billion of which represents its projected foregone revenue from the tax and P106.7 billion in incremental revenues.

Senate President Pro-Tempore Ralph Recto, for his part, filed Senate Bill 2440 which seeks to lower the costs of petroleum products by cutting its excise tax by half and reducing electricity prices by exempting the system loss charge in the sale of electricity from the value-added tax (VAT) for three years.

He said that while the government cannot control the factors affecting the global prices of oil and coal, it can help mitigate its adverse effects on domestic prices.

“The imposition of VAT and the increased excise taxes on petroleum products and coal are too much of a burden on the consumers and businesses during this time of the Covid-19 pandemic,” Recto said in his explanatory note.

“As a mitigating response, it is high time to reduce the excise tax on these products by 50 percent, suspend the applicable duties, and exempt the system loss charge from VAT, thereby effectively lowering the prices of electricity and consequently other basic goods and services,” he added.

The marathon oil price hike along with the reduced passenger demand prompted transport groups to ask the government for a fare hike — a move that Transportation Secretary Arthur Tugade rejected.

In October, the DBCC said it will distribute P1-billion worth of cash assistance to 178,000 bonafide PUV drivers for the remaining months of the year.