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NO CONTROL IN WORLD OIL PRICES

2 senators open to amend TRAIN to remove fuel tax

07:22 AM January 07, 2019

Sen. Aquilino Pimentel III on Saturday said the Tax Reform for Acceleration and Inclusion (TRAIN) Act could be amended to slowly remove the increase in the excise on oil products.

In a radio interview, Pimentel said it was hard to make plans and project revenue if the country was dependent on the excise on fuel, whose price was changed depending on the world market.

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“Our minds should be open to reviewing the TRAIN law, and if we imposed an excise tax on an item whose world price can’t be controlled, we should take a hands-off stance,” he said over radio station dwIZ.

Pimentel noted that there was already an excise on fuel before TRAIN, and the law only increased it.

Sen. Sherwin Gatchalian is also amenable to revising the TRAIN law to enable the government to suspend the scheduled increase in excise on fuel once world oil prices rise.

The TRAIN law allows the suspension of the increase when the global prices average at least $80 a barrel for three consecutive months.

“We can already discard the $80 threshold because as we have seen, oil prices only reached $70 [a barrel] but it caused such an impact on inflation,” Gatchalian said in an interview on dzBB radio.

P2.24 a liter

Under the TRAIN law, an additional levy of P2.24 a liter was imposed for diesel and gasoline beginning 2019. The additional duty consists of P2 excise and 24-centavo value-added tax.

President Rodrigo Duterte initially approved in the third quarter last year a recommendation by his economic managers to suspend the second round of increases in excise on fuel set for this month under the TRAIN law after inflation soared.

But he later heeded the economic managers’ call to proceed with the increases when global oil prices softened.

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Diesel was subjected to an excise of P2.50 a liter starting January 2018. This will go up to P4.50 in 2019 and to P6 in 2020.

Excise on gasoline rose to P7 in 2018 and will go up to P9 in 2019, and to P10 in 2020.

Soaring prices

The increase in fuel excise has been partly blamed for the country’s recent record-high inflation numbers.

Inflation rose to a nine-year high of 6.7 percent in September and October amid soaring global oil prices. It slowed to 5.1 percent in December from 6 percent in November.

During deliberations on the measure, finance officials told lawmakers that world oil prices were expected to go down. But what happened was that the prices rose in 2018 before declining.

Gatchalian cautioned the government not to be complacent about inflation dropping to 5.1 percent in December, saying it was still above the earlier 4-percent target set by the economic managers. (See related story in Business, Page B1.)

“If you exceed the target of 4 percent, this means the public can still feel the effects of rising prices. It means there will still be a clamor to raise transport fares. There can be a domino effect,” Gatchalian said.

He said it was important that the country’s inflation stay within range.

Gatchalian reiterated his call to put off implementation of the increases in the excise on fuel in 2019, arguing that it could do more harm than good. —REPORTS FROM LEILA B. SALAVERRIA AND DJ YAP

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TAGS: Aquilino Pimentel III, fuel tax, Koko Pimentel, Train Act
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