SENATORS DIFFER ON 2ND ROUND OF EXCISE FUEL TAX HIKE
MANILA – Senators on Wednesday offered different reactions to President Rodrigo Duterte's approval of the implementation of the second round of increases in the excise taxes of petroleum products in 2019 upon the recommendation of his economic managers.
Last Thursday, the economic managers took back their earlier recommendation to suspend the second tranche of fuel excise tax increase under the Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law following a succession of price rollbacks.
The TRAIN law imposed a PHP2.50-per-liter excise tax on diesel from zero and hiked the levy on gasoline to PHP7 per liter.
The law also provides that starting 2019, excise taxes for diesel will be hiked by a total of PHP4.50 and those of gasoline by PHP9 under the second tranche.
Senate President Vicente Sotto III said he sees the wisdom behind the move.
“Naiintindihan ko (I understand). I would have done the same thing if I were in their shoes,” he said in an ambush interview.
He said the earlier recommendation of the economic managers to suspend the second round of excise tax increases were done when world oil prices were still high.
“Pero eto ngayon, sunod-sunod ang rollback, ang laki ng rollback. Kaya hindi nakakapagtaka na okay lang na idagdag na (But now, there were successive big rollbacks. So, it is not a surprise that the hike was approved),” Sotto said.
From a peak of USD80 per barrel in October, world crude oil prices made a sharp turnaround to USD68 per barrel on November 29.
Economic managers said Dubai Futures prices are further projected to decline below USD60 per barrel in 2019.
Because of this, they said the projected price of diesel by January 2019 will be at PHP37.76 per liter, inclusive of the PHP2 excise tax; while it will be PHP50.82 for gasoline (95 octane).
At its highest, the price of diesel and gasoline were at PHP48.80 and PHP60.90 per liter, respectively.
Sotto said what the government should do is to go after unscrupulous businessmen and “profiteers” who take advantage of the situation to unjustly raised the prices of basic goods, thus exacerbating inflation.
“Tumaas ang petrolyo, tumaas ang gas, so tinaas nila yung presyo nila (Prices of petroleum rose, so they also raised their prices),” the Senate leader said.
“Nag-rollback, ang laki ng rollback, nag-rollback ba sila? Hindi. So, in other words, ginagamit lang nila(There was a big rollback, did they roll back their prices? No. So in other words, they are just taking advantage),” Sotto said.
Senator Sonny Angara echoed Sotto's observation, saying the President's decision to approve the recommendation of his economic managers should have not come as a surprise.
"It's not a surprise the President agreed with his economic managers because he tends to follow what they say, and this recommendation came after eight successive rollbacks," Angara said.
However, the lawmaker said the government should act swiftly in bringing down consumer prices and in releasing the social welfare benefits provided under the TRAIN law.
The law provides for additional unconditional cash transfers to low-income earners amounting to PHP2,400 for 2018 and PHP3,600 for 2019 and 2020, while the Pantawid Pasada fuel subsidy program entitles qualified franchise holders of public utility jeepneys to fuel vouchers.
Senate President Pro-Tempore Ralph Recto, meanwhile, noted that while inflation is going down, the country’s inflation rate remains high.
From a nine-year high in September at 6.7 percent, inflation has eased to 6 percent in November.
“If the Executive increases taxes on oil next year, it clearly will increase prices and stoke inflation. We can only hope that oil prices will continue to go down,” he said in a statement sent to reporters.
“Nevertheless, government should assist those affected immediately and just as fast as they raise taxes. Equally important is to spend those taxes wisely,” Recto said.
On the other hand, Senator Francis Escudero urged President Duterte to reconsider his position, or at least consider the immediate suspension of the second round of fuel excise tax increase when inflation becomes uncontrollable again anytime in 2019.
"It is best to suspend the implementation of the second tranche of fuel excise tax right away or that the suspension be swift in 2019 so as to effectively address inflation, before it again directly affects the lives of every Filipino," Escudero said in Senate Resolution No. 964, which he filed on Wednesday.
He said postponing the next round of increase in excise tax on fuel will unburden consumers who are already affected by the high price of goods due to the oil tax hike this year and would ease the "demand-pull inflation" that would definitely occur next year due to election spending.
Meanwhile, Senator Paolo Benigno Aquino IV said the government should reconsider its decision to implement the excise tax on fuel increases as the inflation rate remains far from original targets.
He said the November inflation rate of 6 percent still remains far from the government's inflation target range of 2 percent to 4 percent.
Aquino also said the government should have based the suspension of excise tax on fuel on inflation rate and not on world crude prices.
Under the TRAIN law, excise tax on fuel could be suspended if world crude prices breach USD80 per barrel. (PNA)
Photo by Jire Carreon/Rappler