Senator Imee Marcos has filed a bill giving the President the power to lower the rates or suspend the imposition of value-added tax (VAT) on petroleum products for one year during national emergencies of state of calamities.
Senate Bill 2320 seeks to amend Sections 106 and 107 of the National Internal Revenue Code of 1997. These sections refer to VAT on the sale of goods and properties and VAT on importation of goods.
While she seeks power for the president to lower the VAT rate or suspend its imposition, Marcos said excise taxes on petroleum products will be retained to ensure fiscal sustainability on the part of the government.
In filing the bill, Marcos said fuel prices have “steadily risen” following the implementation of Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.
“These oil price hikes have had a noticeable domino effect on the prices of basic goods and services, such as agricultural products, transportation, food, electricity and other essentials,” Marcos, chair of Senate committee on economic affairs, said.
Marcos mentioned the recent price hike imposed by oil companies which reached increases of P1.15 for gasoline, P0.60 for diesel, and P0.65 for kerosene per liter.
Since January of this year, the lawmaker said fuel prices per liter have already increased by P13 for gasoline, P10 for diesel, and P9 for kerosene.
The increases in the price of petroleum products have resulted in inflation being above the government target of 2 to 4% for 2021 with the inflation at 4.2% in January, 4.7% in February, 4.5% in March, April, and May, and 4.1% in June, Marcos said.
Citing Bangko Sentral ng Pilipinas Governor Benjamin Diokno, the senator said increases in oil prices has “consistently identified increases in oil prices as possible upward pressure in inflation.”
“The higher costs of goods and services that are, in part, due to the uptick of fuel prices, are expectedly passed on to the ordinary consumer who may still be unemployed, but has no choice but to deal with the rising prices of everyday essential commodities,” she said.
“In view of the current economic and employment situation of the country resulting from the COVID-19 pandemic, there is a need to give some relief to the ordinary Filipino and ensure that they are able to survive and recover during this pandemic,” she added.
Marcos has raised this suggestion last week after some oil companies announced price increases on petroleum products.
The government is currently collecting a 12% VAT on top of the excise tax under the TRAIN law.
In 2017, President Rodrigo Duterte signed the TRAIN Law, which imposes excise taxes of P2.50 per liter of diesel and P7 per liter for gasoline. — RSJ, GMA News