Back to Top


SOURCE: Press and Public Affairs Bureau

House panel creates TWG to deliberate on suspension of fuel tax hike
06 December 2018 11:12:39 AM

In light of current levels of inflation, the House Committee on Ways and Means chaired by Rep. Estrellita Suansing on Wednesday approved the creation of a technical working group (TWG) to deliberate on various proposals to suspend the excise tax on fuel and petroleum products.

The TWG, to be headed by Rep. Romero Quimbo (2nd District, Markina City), shall consolidate the proposals and consider the concerns of the DOF.

Seven measures seek to stem inflation by suspending the increases and scheduled increases in the excise taxes on fuel, particularly those imposed in Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

These measures are House Bill 8171 authored by Quimbo, House Joint Resolution 27 by Rep. Edcel Lagman (1st District Albay), HJR 29 by Rep. Rodel Batocabe (Party-list, AKO BICOL), HJR 31 by Rep. Mark Go (Lone District, Baguio City), House Resolution 1838 by Rep. Gary Alejano (Party-list, MAGDALO), HR 1919 by Rep. Michael Romero (Party-list, 1-PACMAN), and HR 2253 by Rep. Alejano.

According to Suansing, the executive had earlier pronounced that no increase on the said tax on petroleum would be implemented for next year in view of the rising cost of average Dubai crude oil as well as the public clamor to do so in view of high inflation that the country is actually still grappling with.

However, a consultation with the country's economic managers led Malacañang to the decision to continue the scheduled increase for 2019.

Suansing said that the panel hopes to review the matter "to strike a workable balance between the revenue interest of the government and the financial wellbeing of the country."

Members of the panel and authors of the measures were unanimous in their concern over the possible effects of continuing the tax hike as scheduled, given the current struggles of the poor and other marginalized sectors to cope with the rising prices of goods.

Quimbo stressed the need to suspend excise taxes on fuel, particularly kerosene and diesel, as they have a dramatic impact on the poor and the inflation of items in the food basket of the lowest 20 percent of the population.

He further proposed that the basis for the suspension of excise tax on fuel be changed. Currently, it is pegged at the international trading price of fuel in Dubai.

“Sa tingin natin at base sa nakikita natin is that the basis against which suspension shall take place should not be the price of the international crude oil but rather it should be the inflation itself,” Quimbo said.

“Are we meeting the target or not? And the rationale is very, very simple. It’s that when we passed excise tax on fuel, the main hurdle was it was going to inflationary. No less than the DOF (Department of Finance) said it was going to be inflationary. So therefore what we wanted to balance was to make sure that if in the event that the inflation of the economy becomes uncontrollable, the excise tax on fuel should therefore be adjusted or be suspended,” he added.

For his part, Lagman noted that pushing through with the scheduled tax increases would further increase the prices of goods.

“Any new imposition of increased excise taxes in oil would really exacerbate the inflation situation. Because any increase in the price of fuel over and above what is due has tremendous effects on the prices of oil, on prices of basic food commodities, as well as on employment,” Lagman said.

Go expressed the same sentiment and urged for immediate action to prevent further burden to the Filipino public.

“Another round of tax increase on fuel will cause an inflationary effect that will necessarily result to an increase in prices of basic commodities and services that would add burden to marginalized sectors and families,” Go said.

“As such, immediate remedial measures must be undertaken by the government to normalize and maintain inflation rate as planned and projected by economic managers and to control the unabated increases in the commodities and services,” he added.

The DOF maintained that the rice shortage in 2018, not the imposition of increased excise taxes on fuel, is to blame for the skyrocketing inflation.

According to DOF Assistant Secretary Ma. Teresa Habitan, inflation has been steadily abating, most recently landing at six percent in November from 6.7 percent in October. This slowdown was noted in the indices of food and alcoholic beverages as well as housing, water, electricity, gas, and other fuels.

Habitan said that this reflects the decrease in global prices of petroleum products and the easing of rice supply constraints as part of the importation contracted by the National Food Authority (NFA).

“This bolsters our position that inflation for 2018 was not just a result of the imposition of additional excise tax on fuel but more significantly by the rice management problem we encountered early this year,” she said.

Habitan cautioned that suspension of the scheduled tax hike will deprive the national budget of up to P40 billion in revenue in 2019.

“If we suspend, the automatic suspension that is proposed by the House bill, this deprives the budget immediately. For 2019, for example, if we do not impose the P2 that is mandated under the law, this will deprive the budget of P40 billion for the whole year,” she said.

She reported that under the new orders from the President, the imposition of P2 per liter as required under the TRAIN Law shall be accompanied by stricter monitoring of oil prices.

She added the passage into law of rice tariffication will also help ease the supply constraints “which more greatly impact the increases in inflation.”

Moreover, Habitan countered proposals to peg suspension of tax rates to inflation, saying anchoring fiscal policy to inflation would be difficult. | Czarina Engracia