Suspend fuel tax, senators urge Palace
The Senate may strong-arm the country’s economic managers into proceeding with the suspension of the fuel tax by using the pending 2019 national budget as leverage, Sen. Sherwin Gatchalian said on Sunday.
Gatchalian, chair of the Senate economic affairs panel, broached the possibility of the Senate taking an extreme measure to compel the executive branch to suspend the looming P2-per-liter increase in excise on oil products amid inflationary concerns.
“It’s better to discuss this calmly so we can understand each other, but if this will result in adverse effects on our people, there may be strong-arming on the part of the Senate,” he said in an interview on dzBB radio.
Sought for comment, Senate President Vicente Sotto III said Gatchalian’s suggestion was possible, but this would depend on the sentiment of the members.
“Is it right? Will the majority of senators support [it]? Support what? Suspension or pushing through. The Senate is always a collegial body. So, it depends!” Sotto said in a text message.
President Rodrigo Duterte has not decided whether to suspend the fuel tax increase.
The new proposal to proceed with the increase would be taken up at the regular Cabinet meeting on Tuesday, said presidential spokesperson Salvador Panelo.
On Thursday, Finance Secretary Carlos Dominguez III told a press conference that the economic team had decided to backtrack on its earlier recommendation to suspend the second tranche of oil excise increase.
He said the team now wanted to proceed with the adjustments in view of recent declines in global oil prices.
Crude prices down
Dubai crude oil prices have gone down by 14 percent from an average of $79 per barrel in October to $68 in November, according to Dominguez. The prices are expected to decline further to below $60 in 2019.
The Tax Reform for Acceleration and Inclusion (TRAIN) Act calls for the suspension of the excise on fuel if the price of Dubai crude exceeds $80 a barrel for three consecutive months.
An excise of P2.50 a liter was slapped on diesel and bunker fuel starting this year under the TRAIN law. This would go up to P4.50 in 2019 and P6 in 2020.
Excise on gasoline also increased from P4.35 a liter to P7 in 2018, P9 next year, and P10 in 2020.
“If their explanation is not satisfactory, if it’s not acceptable to the senators, there may be strong-arming if we see that their reason is not logical … what can happen is we can force them through the budget,” Gatchalian said in Filipino.
The Senate, upon the request of the economic team, is rushing passage of the P3.757-trillion general appropriations bill for 2019 in the next two weeks in order to avoid a reenacted budget.
Congress will need to ratify the budget measure before adjourning for Christmas. Otherwise, appropriations, at least for the first few months of 2019, will revert to the 2018 budget, a scenario the economic managers say they do not want.
In the interview, Gatchalian echoed the sentiments of his colleagues, including Senators Juan Edgardo Angara and Aquilino Pimentel III, who warned that continuing the planned 2019 increase in the excise on fuel might result in a new wave of inflation.
“We have to remember how quickly the prices of basic goods would shoot up with inflation. Even if oil prices have stabilized, the prices of goods remain high,” he said.
Inflation rose to a nine-year high of 6.7 percent in September and October due largely to surging prices of fuel and food, particularly rice.
Wages remain low
Gatchalian noted that while prices of commodities remained high, wages were still low and profits of small enterprises continued to shrink.
“Our appeal is to have a grace period in 2019,” he said.
Last week, Senators Angara and Bam Aquino warned that proceeding with the 2019 increase in fuel excise might result in a new wave of inflation, as they urged the economic managers to reconsider.
Pimentel, on the other hand, said the roots of inflation should be “slain on sight.”
Sen. Panfilo Lacson, however, said he agreed with the economic managers to push through with the oil excise increases. —With a report from Julie M. Aurelio
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