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Zarate urges DOF to reconsider position vs fuel excise tax suspension

Bayan Muna party-list Representative Carlos Zarate on Thursday asked the Department of Finance (DOF) to reconsider its opposition to the proposed suspension of excise tax on fuel amid the continued rise in oil prices.

At a House energy committee briefing, DOF Strategy, Economics and Results Group Director Euvimil Nina Asuncion said, “DOF does not support the proposed suspension of excise taxes on fuel as well as the VAT because it translates to significant foregone revenues.”

“The unrealized public spending and investments from the foregone revenues will be detrimental to our economic recovery and long-term growth,” Asuncion said.

“The better and more equitable way to address the impact of increasing fuel prices is to provide targeted support to the vulnerable sectors,” she added. 

The DOF has said the government stands to lose P131.4 billion in revenues if the imposition of excise tax on fuel will be suspended for a year.

If the value-added tax on fuel will also be suspended, the revenue losses will amount to P147.1 billion or around 0.7% of the gross domestic product in 2022, Asuncion said. 

With this, Zarate said, “It’s very unfortunate na i-shot down agad ‘yang proposal na ‘yan dahil we are in the midst of a crisis aggravated by this pandemic.”

[It’s very unfortunate that the DOF immediately shot down this proposal because we are in the midst of a crisis aggravated by this pandemic.]

Although the distribution of P1 billion worth of fuel subsidies was a welcome move, this will only benefit 178,000 public utility vehicle drivers, Zarate said. 

“Hindi makakabenepisyo dito ang maliliit na consumers at milyong milyong mahihirap na kababayan,” Zarate said.

[It will not benefit ordinary consumers and millions of poor Filipinos.]

“Paano ang apektado ng domino effect ng pagtaas ng presyo ng oil products?”

[How about those affected by the domino effect of the increase in prices of oil products?]

Pump prices were hiked for nine straight weeks, with the latest data available indicating year-to-date adjustments at a total net increase of P19.65 per liter for gasoline, P18 per liter for diesel, and P15.49 per liter for kerosene as of October 19. 

The House panel led by Deputy Majority Leader Juan Miguel Arroyo discussed the Department of Energy’s (DOE) proposal to grant the agency an authority to suspend the implementation of fuel excise tax should the price of crude oil exceed $80 per barrel in a month.

Energy Secretary Alfonso Cusi earlier said a new legislation was needed to suspend excise taxes since the provision of the Tax Reform for Acceleration and Inclusion (TRAIN) law which provided a suspension mechanism for the deferment of fuel excise tax increases had already lapsed.

In opposing the proposal, Asuncion said that suspending fuel excise tax would benefit higher income households more than lower income households by 60% “given the higher fuel consumption of the top 10% of households.”

Zarate said the suspension of excise tax would translate into higher purchasing power for consumers.

“So, I hope the Department of Finance and the economic managers will reconsider their position,” the lawmaker said.

“It was recognized in 2018, 2019, 2020 that we can suspend the excise tax if the price of crude per barrel breaches $80. There is no reason why we can’t suspend it now; the crude price is already beyond $90 per barrel,” Zarate said.

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.

Similarly, the TRAIN law has a provision of suspending the scheduled increase in the excise tax when the average Dubai crude oil for three months prior to the scheduled increase reaches $80 per barrel.

This provision had already lapsed following the effectivity of the last tranche of excise tax increase in 2020. — VBL, GMA News