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Public clamor forces freeze of fuel tax

07:25 AM October 16, 2018

The push for the suspension of the excise on fuel under the Tax Reform for Acceleration and Inclusion (TRAIN) Act has gained momentum, as two professors and a former social welfare secretary threw their support behind it.

Seventeen senators had earlier asked President Rodrigo Duterte to support their move to suspend any further increases in excise on diesel, gasoline and other oil products for 2019 and 2020.

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Presidential spokesperson Salvador Panelo on Monday confirmed that the President had already approved the suspension of the second round of excise on fuel.

Document forthcoming

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A document making the suspension official would be forthcoming, he said.

The P2-per-liter excise on fuel is scheduled to go into effect in January 2019.

But Finance Secretary Carlos Dominguez III said the new oil tax system implemented since the start of the year would not be suspended.

Under the TRAIN law, the excise can be suspended if Dubai crude prices average at least $80 per barrel three months before the scheduled increase.

The law lowered personal income tax but jacked up consumption taxes.

‘Unnecessary tax’

Dennis Mapa, dean of the University of the Philippines’ School of Statistics, said the government should not impose additional taxes if social protection services were not delivered to the poor.

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The services include conditional cash transfer for 10 million households, which account for the poorest 50 percent of the population.

In a forum at Ateneo de Manila University, Mapa argued that the extra tax on fuel was unnecessary based on the current revenue flow of the government.

“The Department of Finance (DOF) said the increases in fuel prices in 2018 are unanticipated, but every time there is an increase in the price of diesel, there is a 12-percent VAT (value-added tax) that is being imposed,” Mapa said.

He said there was already an unanticipated VAT of P1.35 per liter from diesel’s average price of P43.6 per liter from January to October.

“From the revenue side, the suspension of P2 will not really hurt the DOF. Unless we fix the social protection angle, the best call is to suspend it now,” he added.

P41B in forgone revenue

Forgone revenue from the suspension of the second tranche of the excise on fuel is projected to reach P41 billion, according to Dominguez.

Under the TRAIN law, an excise of P2.50 per liter was imposed on diesel and bunker fuel starting this year. This is scheduled to go up to P4.50 in 2019 and P6 in 2020.

The excise on gasoline increased from P4.35 per liter to P7 this year, and is projected to reach P9 in 2019, and P10 in 2020.

Social protection

Former Social Welfare Secretary Dinky Soliman shared Mapa’s view that the government should put more rigor in looking into the social protection side of the law.

Soliman said the cash transfer program continued to be implemented but was reaching only 4 million households, when the goal was 10 million.

In February, the DOF granted unconditional cash transfers (UCT) of P2,400 for 2018 to each of some 7.4 million households, 4.4 million of which are existing beneficiaries under the Pantawid Pamilyang Pilipino Program.

But urban poor leaders claimed that the government’s P6 subsidy per day under the UCT was not enough to deal with the inflationary impact of the new tax law.

After the prices of basic commodities soared, Mr. Duterte’s campaign slogan of “courage and compassion” has turned into “crawl and agony,” Akbayan Rep. Tom Villarin said on Monday.

“The higher prices go, the lower [the] Filipinos’ quality of life gets,” Villarin said after he and his fellow Akbayan nominees filed their certificate of nomination and acceptance in the Commission on Elections. —Reports from Mariejo S. Ramos, Julie M. Aurelio, Ben O. de Vera, Roy Stephen C. Canivel and Marlon Ramos

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TAGS: Carlos Dominguez III, Fuel excise tax, Rodrigo Duterte, Salvador Panelo, Train Act
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