Local pump prices have gone up for the eighth straight week as oil firms on Monday raised gasoline prices by P1.8 per liter (/L), and increased diesel and kerosene prices by P1.5/L and P1.3/L, respectively. — PHILIPPINE STAR/ MICHAEL VARCAS
THE SUSPENSION of excise taxes on petroleum would result in as much as P131.4 billion in revenue losses for 2022, potentially hampering the country’s budget for recovery, the Department of Finance (DoF) said.
In an Oct. 20 memorandum to Finance Secretary Carlos G. Dominguez III, Finance Undersecretary Antonette C. Tionko recommended that the suspension of excise taxes on fuel products should be “appropriately studied” amid substantial foregone revenues that “may affect the government’s budget for COVID-19 (coronavirus disease 2019) recovery measures.”
The memorandum from the DoF’s Revenue Operations Group was made in response to Energy Secretary Alfonso G. Cusi’s proposal to suspend excise taxes on petroleum products as pump prices continue to rise.
The suspension, Mr. Cusi earlier said, might reduce pump prices by P8 to P10 per liter.
Ms. Tionko said foregone revenue from the Bureau of Customs could reach a total of P24.7 billion next year if the excise tax is suspended. Incremental excise tax revenues under the Tax Reform for Acceleration and Inclusion (TRAIN) law would account for P106.7 billion.
Republic Act No. 10963 or TRAIN law raised excise tax on fuel in three tranches from 2018-2020.
Excise tax now stands at P10 per liter for gasoline, P6 per liter for diesel, and P5 per liter for kerosene.
Oil prices went up on Wednesday after as US fuel stocks fell amid rising demand, Reuters reported. Brent crude futures went up 0.9% or 74 cents to $85.82 per barrel, the highest since Oct. 2018.
Local pump prices have gone up for the eighth straight week as oil firms on Monday raised gasoline prices by P1.8 per liter (/L), and increased diesel and kerosene prices by P1.5/L and P1.3/L, respectively.
The DoF’s Ms. Tionko also confirmed that the Energy department could only suspend excise taxes through new legislation amending the oil deregulation law.
A safety net provision in the TRAIN law allowing for excise tax suspension as a means to guard against fuel price shocks only refers to the tax increases under the law, which took place in 2018, 2019 and 2020, she added.
Meanwhile, presidential candidates weighed in on the proposed suspension of excise taxes on fuel products.
Labor leader Leodegario “Ka Leody” de Guzman said that suspending excise tax will not affect fuel prices much and instead urged for the regulation of the oil industry and local adoption of renewable energy and electric vehicles.
“Even without the excise tax, local oil prices will still be high because of monopoly pricing in a deregulated industry,” Mr. De Guzman, the presidential candidate of Partido Lakas ng Masa (PLM), said in a text message.
The oil industry was deregulated through Republic Act 8479 or the Downstream Oil Industry Deregulation Act of 1998 in a bid to stabilize and provide reasonable oil prices and encourage competition and investment in firms, among others.
Senator Panfilo M. Lacson and former Senator Ferdinand “Bongbong” R. Marcos, Jr. both expressed support for the proposed halt on the collection of excise taxes on fuel products.
Mr. Marcos also called on the DoE to consider the restoration of the defunct Oil Price Stabilization Fund that was set up by his father and the late dictator Ferdinand Emmanuel E. Marcos, Sr. in 1984 to protect the economy from prolonged increase in global oil prices.
Meanwhile, Manila Mayor Francisco “Isko Moreno” Domagoso said he would seek a 50% reduction in taxes on oil, if elected President.
“If given a chance… the first thing I would do is to lower the tax on oil by 50%,” he said in a meeting with farmers in Tarlac.
The standard bearer of Aksyon Demokratiko said that his proposal would help lower the price of electricity. — Jenina P. Ibanez and Russell Louis C. Ku