House panel pushes excise tax cut in crisis

Metropolitan Manila Development Authority (MMDA ) trucks offering free rides to workers are seen on Commonwealth Avenue in Quezon City in this file photo.

WITH their power of taxation and despite reservations from the government’s economic team, the Fuel Crisis Ad Hoc Committee has strongly recommended to the leadership of the House of Representatives approval of House Bill 10488 reducing excise tax on fuel products.

In a letter to Speaker Lord Allan Velasco, the special committee said passage of the HB 10488, reducing excise tax on fuel products, with the amendments to automatically suspend TRAIN Law excise tax rates when crude oil price breaches $80 and revert the same once it goes down to $65; and the bill amending the Downstream Oil Industry Deregulation Act could swiftly address the country’s problems with rising prices of petroleum products.

The letter, signed by the chairmen of four House Committees—on Economic Affairs, Rep. Sharon Garin; Ways and Means, Rep. Joey Sarte Salceda; Energy, Rep. Juan Miguel Arroyo; and Transportation, Rep. Edgar Mary Sarmiento—was sent to Velasco last March 10 pending actions from the Executive Department.

The bill reducing the excise tax on fuel products is pending on second reading while the amendments to the  Downstream Oil Industry Deregulation Act  were approved at the committee level.

The House leaders also noted that the government must mitigate the ill effects of high fuel prices immediately.

“Our country is facing a serious energy crisis as oil prices have steadily increased for the past 10 weeks. The year-to-date price adjustments for gasoline, diesel, kerosene, and LPG stand at net increments of P20.25 per liter, P20.55 per liter, P17.58 per liter, and P12.05 per kilogram, respectively. As global oil prices continue to soar, the prices might even peak at P78.33 per liter for gasoline, P68.97 per liter for diesel, P71.21 per liter for kerosene, and P107.08 per kilogram for LPG. The public, especially the most vulnerable members of our society, looks upon us to provide immediate aid to prevent further price triggers to our basic commodities,” the special committee said.

Executive actions

While these pieces of legislation are being processed, the Ad Hoc Committee recommended that the Palace order the immediate release of P2.5 billion to the Department of Transportation to provide cash grants to bona fide Public Utility Vehicle drivers and P500 million to the Department of Agriculture for the fuel discount to farmers and fisherfolk.

It asked the Department of Budget and Management to draw P4.5 billion from the Contingency Fund of the President and P3 billion from the PAGCOR Socio-Civic Projects Fund to supplement the existing fuel subsidies to the transport and agriculture sectors.

The lawmakers also requested the Bureau of Treasury to certify the excess collection from VAT, estimated to be at P75.2 billion, to finance the Unprogrammed Funds of P5 billion in fuel subsidy, and provide subsidies to the sectors hardest hit by the fuel crisis.

They asked the Palace to instruct the Department of Energy to seriously study the costs and benefits of building a strategic petroleum reserve.

They also called for the tripartite Wage Boards to increase the minimum wage and appeal to the private sector to contribute to the cause of mitigating the crisis.

The lawmakers also urged the Palace to direct the Land Transportation Franchising and Regulatory Board and local government units (in the case of tricycles) to increase the fares to a reasonable rate to offset the increase in fuel prices taking into account the studies done by economic managers.

Not enough

Deputy Minority Leader Stella Luz Quimbo backed the proposal urging the government to tap excess VAT collections resulting from the increase in crude oil prices to fund social services.

“The P2.5-billion subsidies are [equivalent to] P6,500 per PUJ driver [but are] good only to absorb the diesel price increases for 13 days of operations [assuming 25 liters per day],” said Quimbo.

“In addition, the proposed amount of subsidies cannot cover tricycle and habal habal drivers. Historically, the distribution of aid is not seamless. Both of these considered, it is still appropriate to suspend the excise taxes for immediate and sufficient relief to affected sectors. Suspending taxes will provide relief at the point of purchase of gasoline products. In the case of subsidies, the relief will come only when such are distributed,” she added.

In an effort to mitigate the effect of runaway fuel prices on operators and drivers of public utility vehicles, San Jose del Monte City Rep. Florida P. Robes urged the leadership of the DOTr and LTFRB to immediately release the earmarked P5 billion worth of subsidies.

In House Resolution 2515, Robes said the Russian invasion of Ukraine in the past weeks has raised the prices of crude oil to more than $110 per barrel in the world market which has led to an exponential increase of local prices of petroleum products.

As of press time, the price of crude oil has ballooned to more than $120 per barrel prompting another round of price increase this Tuesday (March 15) in the local market. Diesel has gone up to more than P13 per liter while gasoline is higher with an additional P7 per liter increase.

The 2022 General Appropriations Act (GAA) provides for at least 5 billion in automatic fuel subsidy whenever world oil prices breaches $80 per barrel.

She said the huge increase in petroleum products will further burden long-suffering public utility drivers still reeling from the impact of the Covid-19 pandemic.

Image credits: Nonoy Lacza


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