DOF: Congress needed for rollback of fuel excise tax rates

MANILA, Philippines — Suspending fuel excise tax rates that took effect this year would need action from Congress, the Finance department said Tuesday after some senators urged President Duterte to lift them and soften the effects of rising prices.

Finance Assistant Secretary Tony Lambino said the Tax Reform for Acceleration and Inclusion (TRAIN) law  does not have a provision to rollback the excise tax on oil products. 

"There is no provision on the rollback of the current excise tax (on oil) that was implemented this year. So, that will need a congressional action," Lambino said in a press briefing in Malacañang.

TRAIN, the first package of the government's tax reform program, imposes new taxes on diesel, liquefied petroleum gas, kerosene and bunker fuel for electricity generation and higher taxes on other oil products. The excise taxes on oil products would be gradually increased from 2018 to 2020. 

The next round of oil excise tax hike was supposed to take effect next January 1. The law allows the temporary suspension of the increases if the average price of Dubai crude based on Mean of Platts Singapore reaches or exceeds $80 per barrel for three consecutive months. 

TRAIN, like all laws, went through deliberations and voting at both houses of Congress.

READ: Grace Poe, Cynthia Villar regret signing TRAIN law?

While the condition provided by the law has not been met, Duterte agreed this week to suspend the second round of increase to anchor inflation expectations and counter profiteering and hoarding.

Economic managers have said crude prices are likely to stay above the $80 threshold over the next two months.

But some senators believe the suspension should cover not just the next round of increase but any further hikes in excise taxes on fuel. In a letter sent to the president last week, 17 senators from the majority bloc said the suspension of oil excise tax increases would lift the "heavy burden" carried by Filipinos affected  by high commodity prices. 

'Unlikely for prices not to exceed threshold'

Asked if the next round of increase would be suspended even if average crude prices do not breach $80 per barrel over the next few months, Lambino said: "Well, if for instance a dollar (lower than the threshold), we do not need to discuss that. We will find a way." 

"But if it's $60, $20 dollars below the threshold, which is close to impossible, we have to talk about it. But it's unlikely that the threshold would not be exceeded," he added. 

Lambino said the possibility of a suspension not happening next year is very slim. He cited the huge demand from countries experiencing winter, the rift between Iran and the United States and the economic problems hounding Venezuela. 
 
Finance officials previously said the government would not be able to collect about P40 billion next year if the next tranche of oil excise tax increase is suspended. 

Lambino said the government would cut expenditures on non-infrastructure programs to offset the effect of the foregone revenues and to meet this year's deficit target. On the revenue side, Lambino said the government would continue to improve collection efforts and strengthen the campaign against smugglers and tax cheats.