House prefers suspending fuel excise tax rather than giving aid – Tulfo

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MANILA, Philippines — The House of Representatives leadership seems to be inclined to temporarily suspend excise taxes on fuel until December, instead of giving financial aid, to address the continuing surge in oil prices,  ACT-CIS party-list Rep. Erwin Tulfo said in a press briefing on Monday.

The briefing took place after Speaker Ferdinand Martin Romualdez and other ranking lawmakers met with oil companies’ representatives.

The length of suspension —until December —  was chosen be the demand for fuel will go down and consequently so will prices, Tulfo explained, citing the observation made before that meeting by Albay Second District Rep. Joey Salceda, who chairs the Committee on Ways and Means.

“But the problem is from now until December, how will we get there? That’s why we’re talking with them [oil companies], but we know that the government’s hands are tied because of the Oil Deregulation Law […] so the speaker [Martin Romualdez] asked oil companies, how would you contribute?” Tulfo said in a mix of Filipino and English.

According to Tulfo, the representatives of the oil companies promised that they would relay the meeting’s details to their firms’ higher officials.

Tulfo also said that Romualdez would have to make a formal recommendation to President Ferdinand Marcos Jr. for the suspension of the excise taxes on fuel, which only the president could do.

Loss of revenue

Excise taxes were placed on fuel by Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Law (TRAIN), as an additional funding source for the past administration’s infrastructure program.

Tulfo said that based on the computations by Santa Rosa City Rep. Dan Fernandez, who chairs the Committee on Public Order and Safety, suspending the excise tax on fuel would make the government lose around P4.9 billion per month in revenues.

The total lost revenue, if the suspension of the tax is implemented from September to December, can amount to anywhere between P12 billion to P15 billion, Tulfo said.

“So if ever we suspend, it will have to be recommended by the speaker to the president. Only the president can do that, the suspension of excise taxes,” he added.

In exchange, fuel prices may be cut by around P10 to P14 per liter.

No effect on firms’ balance sheet

Energy Undersecretary Sharon Garin said that oil companies would not be greatly affected — negatively or positively.

“The advantage or disadvantage if you suspend the excise tax won’t go to them, because what they earn is the same,” Garin said. “They put it on top of the price. It’s an additional cost. So there were suggested solutions that we suspend the excise tax, but this also came from the lawmakers.”

“This has been a proposal around five years ago, four years ago when oil prices started increasing too. So it was one of the suggestions. But I think if you ask me, it won’t affect their balance sheet,” she added.

The House leadership’s direction actually is inclined towards the suggestion of Gabriela party-list Rep. Arlene Brosas, a minority lawmaker who is part of the Makabayan bloc. She had been insisting that excise taxes and the value-added tax on fuel products must be scrapped.

Ironically, the suggestion also goes against the proposal of Marikina 2nd District Rep. Stella Quimbo, senior vice chair of the appropriations committee, who earlier said that the government would need to analyze carefully if it should suspend tax collection or opt to give social aid to affected consumers instead.

She said the slower-than-predicted gross domestic product (GDP) growth for the second quarter of 2023 should be considered.

Aside from Romualdez, the meeting with the oil players was attended by Tulfo, Salceda, Senior Deputy Speaker Aurelio Gonzales (a Pampanga representative); Majority Leader Manuel Jose Dalipe (a Zamboanga City representative), and Ako-Bicol party-list Rep. Elizaldy Co, who chairs the appropriations committee.

Other participants in the meeting include Energy Undersecretary Sharon Garin and representatives from the following oil companies:

• Petron Corp.
• Pilipinas Shell Petroleum Corp.
• Independent Philippine Petroleum Companies Association
• Chevron Philippines Inc.
• Philippine Institute of Petroleum
• Flying V
• Total Philippines Corp

ATM