MALACAÑANG is moving to preempt a proposed Joint Resolution of Congress seeking the suspension of excise taxes on fuel products—with some lawmakers pushing for a rollback to December 2017 levels—which was expected to top the agenda when the Senate and the House of Representatives resume regular sessions on November 12.
Senate President Vicente C. Sotto III said he received a report that President Duterte himself conveyed this course of action in a Palace meeting with Senate Majority Leader Juan Miguel F. Zubiri and other senators early this week.
“No need for the [Joint] Resolution, just Executive action is enough,” Sotto told the BusinessMirror.
The call to suspend the higher excise taxes on petroleum products had gained currency since inflation started to pick up after the first semester, hitting a nine-year record of 6.7 percent in September. Many sectors had blamed the Tax Reform for Acceleration and Inclusion (TRAIN) law, particularly the taxes on petroleum products, for fueling inflation.
In an October 9 letter, 17 majority senators endorsed to Duterte the suspension of the 2019 and 2010 increases scheduled in the TRAIN law, but the minority pitched a rollback to the December 2017 levels, or just before the first-round excise tax hikes kicked in with the effectivity of TRAIN in January.
A local economist, however, told the BusinessMirror the suspension of the scheduled next-round increase on fuel tax can only do so much in weathering inflation, as the holiday season presents another cycle of price surges.
Zubiri, in a separate text message, clarified that what the senators want to suspend are “the additional P2 excise tax to be added in January 2019, not the previous year,” obviously referring to the minority bloc’s desire to suspend even the rates that took effect in 2018.
“And I don’t think we need a resolution for it [suspension of excise tax hikes] as we gave that power to the President in the TRAIN law,” Zubiri added.
The Senate majority leader also pointed out that President Duterte “can motu proprio suspend the excise tax on fuel if it is over $80 per barrel for three consecutive months.”
Sotto clarified on Tuesday that the senators earlier sent a letter, “not a resolution,” to Duterte seeking the possibility of suspending excise taxes, adding: “Not only the incoming one [for 2019], but the one that is provided by law [if oil goes up to $80 per barrel],” or the one that was imposed on January 1.
Limited fix for inflation
The suspension of the scheduled 2019 increase on fuel tax can only do so much in curbing inflation, an economist told the BusinessMirror, because the holiday season spells more cycles of price surges.
In an interview, School of Statistics Dean Dennis S. Mapa of the University of the Philippines said the government’s decision to suspend the next tax hike on fuel will certainly help in tempering oil prices. However, he argued this will not slow inflation, which is seen to surge in the next months with prices of goods expected to go up during the
holiday season. “I think that the increases [in oil prices] will be a bit slower now. There will be an increase, but the increase will be slower,” Mapa said.
“The problem now is there are other goods also in the last quarter that are typically higher because of seasonality, like noche buena products. I believe that will heavily impact [on] inflation,” he added.
Mapa argued it is important that inflation stabilize and return to normal numbers the soonest, as inflation on the poor is now at 8.2 percent, which could go as high as 10 percent if prices continue to soar the way it has been the past months. “That would really hurt the poor if that would actually increase in the future,” he said.
For Mapa, the suspension of the next fuel excise tax increase will help in the sense that it will no longer push inflation up. However, he noted its effect could only be felt next year given the scheduled hike is penciled on January 1, 2019. “The good thing is that it will no longer increase oil prices as many expected when the second round of excise tax is applied on January 1, 2019. However, inflation will taper off only by the next quarter and would start to return to some normal numbers by 2019,” the statistician explained.
With Elijah Felice E. Rosales
Image credits: Alysa Salen