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House moves to suspend fuel tax

THE HOUSE Committee on Ways and Means on Thursday approved a bill that would temporarily suspend or lower the excise tax on some fuel products for six months, a move that is estimated to cost the government around P45 billion in foregone revenues.

The committee approved a substitute bill that would temporarily scrap the excise taxes on diesel, kerosene, and liquefied petroleum gas (LPG). The excise tax on low-octane gasoline will be lowered to P4.35 per liter (/L), while the tax on premium gasoline will remain in place.

Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law raised excise tax on fuel in three tranches from 2018 to 2020. The tax rates are currently at P10/L for gasoline, P6/L for diesel, P5/L for kerosene, and P3/L for LPG.

“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,” Albay Rep. Jose Ma. Clemente S. Salceda, chair of the committee, said in a statement.

The suspension of excise tax on fuel will last for six months.

The substitute bill would be mainly based on House Bill (HB) 10438, authored by Mr. Salceda, but would incorporate HB 243, 10411, 10426, and House Resolutions 2318 and 2320.

“We embedded a mechanism (in the bill) for reverting it back to TRAIN rates if the prices normalize. If it goes back to $65 per barrel of crude oil, then the excise tax rates will also normalize,” Mr. Salceda said.

The bill also proposes a social impact stabilization fund that would provide subsidies for affected sectors such as farmers, fisherfolks, and transport workers when prices of fuel increase.

This will be funded by a P2/L charge for diesel and gasoline if global crude oil prices go below $45 per barrel.

“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 assistance. When the prices are high, we can release these funds to the public,” Mr. Salceda said.

Mr. Salceda expressed confidence the House of Representatives will approve the bill and send it to the Senate by the fourth week of November, adding that this is a priority measure of House Speaker Lord Allan Jay Q. Velasco.

Bayan Muna Rep. Carlos Isagani T. Zarate, meanwhile, urged President Rodrigo R. Duterte to certify the bill as urgent to fast-track its approval.

The suspension of the excise tax on oil was first floated by the Energy department, as pump prices soared in recent weeks.

As of Nov. 9, year-to-date pump prices for gasoline and diesel have increased by P20.95/L and P17.50/L, respectively, according to data from the Energy department.

However, the Department of Finance (DoF) is cool to the proposal. The DoF noted a six-month suspension of the fuel excise tax would lead to foregone revenues worth P37.5 billion, which may hamper the country’s economic recovery from the coronavirus pandemic.

Lawmakers are also running out of time to tackle the legislative agenda. Congress adjourns for the Christmas break on Dec. 18. It will hold sessions from Jan. 17-Feb. 4, before adjourning to prepare for the national elections in May. — Russell Louis C. Ku

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