Christina
Mendez, Jess Diaz (The Philippine Star) - May 23, 2018 - 12:00am
MANILA, Philippines —
As fuel prices soar, Malacañang expressed openness yesterday to the suspension
of hefty excise taxes on diesel, liquefied petroleum gas (LPG), kerosene and
bunker fuel that is used to produce electricity.
Magdalo party-list Rep.
Gary Alejano said that under the Tax Reform for Acceleration and Inclusion
(TRAIN) law, the tax on these products must be suspended when the price of
crude oil in the world market reaches $80 per barrel.
Malacañang agreed, with
presidential spokesman Harry Roque saying, “We’re ready, if it reaches that
price, to suspend the collection of excise taxes on oil products.”
He said the departments
of finance and budget would be consulted before any suspension, particularly on
its impact on certain social services.
“The price of crude oil is reaching a multi-year high of $80. Brent crude is
already at $79.35 per barrel, while Dubai crude is at $74.45,” Alejano said
yesterday.
Brent crude is
extracted in Europe while Dubai crude is produced in the Middle East. Brent is lighter
than Dubai. The two are usually used as price benchmarks.
“The movement of crude
oil prices in the world market is alarming and should be monitored closely,
given also the political crisis in the Middle East right now. Being a net oil
importer, the Philippines is taking a huge hit from increases in crude oil
prices, which are further worsened by the new petroleum excise taxes under
TRAIN law,” Alejano said.
Since the law’s
implementation in January this year, he said the total price increase as of last
Monday has been P8.07 per liter for gasoline, P8.95 for diesel and P9.15 per
liter of kerosene.
He said people are
already reeling from increases in the cost of diesel and other oil products and
their domino effect on prices of products and services.
Administration
officials have admitted that the monthly increases in consumer prices since
January were largely due to oil taxes imposed under TRAIN.
TRAIN levied a total of
P6 tax on diesel, cooking gas, kerosene and bunker fuel. The levy was spread over
three years up to 2020.
This year’s first
installment of the tax varies on the product. In the case of diesel, it was
P2.50 per liter. On cooking gas, it was P1. The remainder of the P6 would be
collected next year and 2020.
On top of the excise
tax, the law imposes the 12-percent value added tax based on the new levy.
Thus, in January, the total increase in the retail price of diesel was almost
P3 per liter.
Alejano and his
opposition colleagues are calling on the House of Representatives to review the
law and to suspend it in the meantime, while the Makabayan bloc of seven
leftist party-list representatives wants it repealed.
Quirino Rep. Dakila
Cua, who chairs the committee on ways and means, said he was open to reviewing
TRAIN but not to suspending it.
“If you suspend it,
that would affect the national coffers. That is not a responsible thing to do,”
he said.
Administration
officials have starting shooting down the review and repeal proposals in both
the House and the Senate.
In the Senate, there is
a similar review initiative started by Sen. Paolo Benigno Aquino IV.
According to the Bureau
of Internal Revenue, taxes on oil products imposed under TRAIN brought in an
additional P4.73 billion in the first three months of this
year.
Militant groups
yesterday launched a signature drive against the implementation of the
TRAIN.
Representatives from
Bagong Alyansang Makabayan (Bayan), Bayan Muna and other cause-oriented groups
sought the signatures of hundreds of commuters queuing at the MRT-North
Avenue station in Quezon City.
Bayan secretary-general
Renato Reyes and Teodoro Casiño of Bayan Muna hope to gather enough support for
their campaign against the
TRAIN Law before
Congress goes on break on June 1.
The groups have yet to
set the number of signatures they hope to attain, which Reyes is hoping will
convince lawmakers to tackle urgent
bills seeking to repeal
or suspend the tax measure.
“We hope to submit the
signatures we have gathered to Congress next week,” said Reyes in a statement.
He urged Congress
to scrap the tax reform law, which he said has become a burden for
ordinary Filipinos.
Price monitoring
Socioeconomic Planning
Secretary Ernesto Pernia called for stronger price monitoring of goods and
strict enforcement of sanctions against erring businessmen found to be unjustly
raising prices amid the implementation of the TRAIN Law.
During yesterday’s
first congressional hearing on the second package of the tax reform program,
which deals with the rationalization of incentives for businesses, Pernia
acknowledged that the steep rise in inflation in the first four months of the
year is in part because of the imposition of higher excise taxes under TRAIN.
But at the same time,
he pointed put that it is also a natural occurrence in a rapidly growing
economy and increase in demand following higher disposable incomes from the
reduction in personal income tax.
Another factor for the
rapid increase in prices is profiteering by businesses, such as those who sell
old stocks at much higher prices, he said.
“There’s also some
fraction that can be attributed to profiteering because TRAIN 1 has become a
convenient whipping boy, a convenient alibi for those who want to take
advantage of the situation to increase prices, even if it is not really
warranted,” he said during the hearing of the House ways and means committee on
TRAIN 2.
Pernia said there is a
need to strengthen the price monitoring activities of the Department of Trade
and Industry (DTI) and to strongly enforce sanctions on those found hiking prices
without cause.
“Price monitoring is
DTI’s job with corresponding sanctions,” he said when sought for comment.
Prices of goods and
services in the country rose at a faster pace of 4.5 percent in April from 4.3
percent in March and 3.2 percent in April 2017. Out of the April rate, 0.5 to
0.7 percentage points can be attributed to TRAIN.
Finance Secretary
Carlos Dominguez III also said TRAIN has been “unfairly blamed” for the
elevated inflation rate as rising prices of imported commodities also come into
play.
“By our estimates,
fully two-thirds of last April’s 4.5 percent inflation rate is typical of a
rapidly expanding economy. The remaining is due mainly to the sharp increases
in key imported commodities specifically oil, the realignment of currency exchange
rates and a robust increase in domestic demand,” he said.
“At any rate, the
inflationary impact of TRAIN is expected to diminish over the next few months,”
he added.
Dominguez said the
government is already implementing the unconditional cash transfer program to
cushion the effects of elevated inflation on the poorest households.
During a House ways and
means committee hearing, Dominguez told lawmakers the first package of the
TRAIN law “continues the process of fiscal consolidation that won us a succession
of credit rating upgrades.”
“With everyone’s
continued support of the Comprehensive Tax Reform Program, we expect to be
upgraded once more in the upcoming rating periods,” he added.
Finance Undersecretary
Karl Kendrick Chua, for his part, said pursuing the administration’s tax reform
program is necessary to maintain the stable and positive outlook assigned by
credit rating agencies to the Philippine government.
To recall, credit
watcher S&P Global Ratings last month raised its credit outlook for the Philippines
to positive from stable, raising the possibility of a rating upgrade for the
country on the back of solid economic growth, healthy external position and
improvements in policy-making.
Among the factors cited
by the S&P was the TRAIN law, which it said would ensure that finances
would remain sustainable while addressing the nation’s infrastructure needs and
chronic underinvestment. With
Emmanuel Tupas, Czeriza Valencia, Mary Grace Padin
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