THE House Committee on Ways and Means approved on Thursday a substitute bill reducing the excise taxes on petroleum products for six months.
Albay Rep. Joey Sarte Salceda, panel chairman and principal author of the bill, said the proposal will reduce excise taxes on diesel, kerosene, and liquefied petroleum gas to zero.
He said the excise taxes on low-octane gasoline, used primarily by tricycle drivers, will also be reduced to P4.35 from the current P7, while taxes on premium gasoline will be retained at P10.
“The excise tax suspension will be for six months. It’s immediate relief for Filipino families, especially affected sectors. The bill will cost the government around P45 billion, but what the government loses, the consumer gains,” Salceda said.
The committee approved the substitute bill following the recommendation and amendments of the technical working group members, including the chief of the House Committee on Economic Affairs Rep. Sharon Garin, Baguio Rep. Mark Go, Marikina Rep. Stella Luz Quimbo, and PBA party-list Rep. Jericho Nograles.
Salceda said there is a self-correcting mechanism in the bill.
“We embedded a mechanism for reverting it back to TRAIN rates if the prices normalize. If it goes back to 65 dollars per barrel of crude oil, then the excise tax rates will also normalize,” Salceda added.
“The premise of this tax relief bill is that the situation is not normal. If inflation weren’t so high, we would be discussing other matters. But now, consumers are hurting. Inflation is high. Incomes are depressed. So, immediate relief is obviously necessary,” he said.
Social impact fund
Meanwhile, Salceda said the measure also creates a special fund devoted explicitly towards ayuda for affected sectors whenever oil prices go up.
Called the Social Impact Stabilization Fund, the mechanism will be funded by a charge of P2 per liter of diesel and gasoline when global prices reach lower than 45 USD per barrel of crude.
“The government manifested in our hearings that the problem with asking for a subsidy that is larger than their P1-billion fund for PUVs is the lack of sources. This one answers it for future oil price problems.”
“The 30-year average for crude is at around 48 USD per barrel. So, the prices will have to be abnormally low for the system to kick in. Basically, it addresses the cyclicality of prices. When they are too low, we can charge more so that we have funds in reserve for future ayuda. When the prices are high, we can release these funds to the public,” Salceda said.
Certify as urgent
House Deputy Minority leader and Bayan Muna Rep. Carlos Isagani Zarate strongly urged Malacañang to certify the bill as urgent to expedite its passage by both houses of Congress.
He said the six-month suspension of the excise taxes on oil products is a partial victory for consumers.
“The suspension of the excise tax on oil products would be a welcome reprieve for struggling public transportation drivers and operators, farmers, fisherfolks and consumers from the still continuing oil price hikes. Though we maintain our strategic position to repeal the anti-people provisions of the TRAIN law, the approval of this urgent bill is a step at the right direction and reflects the true and dire situation of our people on the ground, who are still coping with the pandemic-aggravated crisis,” said Zarate.
“The bill will effectively place most fuel prices to pre-TRAIN law levels, specifically for regular gasoline, diesel, LPG and kerosene, oil products mostly used by consumers. As proposed, the excise taxes for these products will be zero, except for regular and premium gasoline, for six months once the law becomes effective,” said Zarate.
According to Salceda, the House hopes to turn the bill over to the Senate by the third or fourth week of November, as “this is a priority measure of Speaker Velasco. I have explicit instructions from my Speaker to get this done.”
Opposition
Meanwhile, Department of Finance Director Arvin Quiñones maintained the agency’s opposition to the proposal.
“The DOF does not support the various proposals to lower or suspend the TRAIN fuel taxes because these translate to significant forgone revenue, these will be detrimental to our recovery and long-term growth, and these will be inequitable,” he said.
“The better and more equitable way to address the impact of the increasing fuel prices is to provide swift and targeted support to the vulnerable sectors,” he added.
According to Quiñones, the government has already committed to support the transportation sector amid the increasing oil prices, so the suspension of the fuel excise tax may no longer be necessary.
He said the government will release P1 billion to the Land Transportation Franchising and Regulatory Board (LTFRB) to provide cash grants to around 178,000 bonafide PUV drivers for remaining months of the year.
“Providing a targeted cash subsidy system to the transportation sector will be more equitable than suspending the fuel excise taxes, which may only subsidize the consumption of higher income households,” he added.
However, lawmakers and transportation groups reiterated that the P1-billion fuel subsidy for public utility vehicles is not enough to address the impact of the soaring prices of oil.