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Gov’t stands to lose P131.4B in revenues in 2022 due to suspension of oil excise tax —DOF

The government stands to lose more than a hundred billion pesos in revenues for 2022, which could impact the budget for pandemic recovery measures, if the implementation of excise taxes on petroleum products will be suspended, the Department of Finance (DOF) said.

In a memorandum to Finance Secretary Carlos Dominguez III dated October 20, Finance Undersecretary for Revenue Operations Group Antonette Tionko said the suspension of imposition of excise taxes on petroleum may result in “substantial revenue loss amounting to P131.4 billion for 2022.”

Tionko recommended that “any suspension of excise taxes should be appropriately studied as the revenue to be foregone is substantial and may affect the government’s budget for COVID-19 recovery measures.”

The DOF official made the recommendation following Energy Secretary Alfonso Cusi’s proposal to grant the Department of Energy (DOE) the authority to suspend excise tax on fuel amid the continued rise in oil

Cusi estimated that suspending excise tax can lower pump prices by around P8 to P10 per liter.

In particular, the Tax Reform for Acceleration and Inclusion (TRAIN) law increased excise tax on fuel in three tranches from 2018 to 2020, bringing the total duties to P10 per liter for gasoline, P6 per liter for diesel, and P5 per liter for kerosene at present.

The Energy chief, however, said suspending excise taxes cannot be done through an executive order by the President, thus a new legislation is needed since the provisions of the Bayanihan 1 law, which granted the President emergency powers to undertake measures to mitigate the effects of the pandemic have already lapsed.

The provision of the TRAIN law suspending the scheduled increase in the excise taxes when the average Dubai crude oil for three months prior to the scheduled increase reaches $80 per barrel has also expired, following the effectivity of the last tranche of excise tax increase in 2020.

Tionko agreed that “the only possible way the DOE may be granted powers to suspend is through legislative measures.”

“The power of taxation is vested in Congress and absent any law (such as Bayanihan 1), the DOE, the DOF, or any other agency of the government has no power to suspend the imposition of excise taxes,” she said.

The Finance official also noted that the TRAIN law cannot be invoked to suspend excise taxes on petroleum since the suspension only refers to the excise tax increases mandated under the tax reform measure, which have already taken place on January 1 of 2018, 2019, and 2020.

Cusi is seeking to amend the Oil Deregulation Law, which will include an authority for the department to suspend fuel excise tax.

The DOE is also pushing for the unbundling of oil prices, which he said would result in greater market transparency by establishing the trends in the prices of oil and finished petroleum products.

Cusi said the government is also studying how to reimplement its subsidy program for public transport drivers to alleviate the burden of higher fuel costs.

Amid the price increase of fuel products, jeepney drivers had called for a fare hike of at least P3.—AOL, GMA News