Call for temporary freeze of fuel excise tax escalates

Malacañang was asked on Friday to “temporarily suspend” the imposition of higher excise tax on gasoline and diesel amid rising oil prices seen to slam a double whammy on consumers and commuters, as well as provincial farmers delivering harvests to the market.

Senator grace Poe recalled that the 2017 Tax Reform for acceleration and Inclusion (TRAIN) law started imposing a series of higher excise tax adjustments on petroleum products beginning 2018, with the excise tax on diesel that started at P2.50 per liter in January 2018, increasing to P4.50 the following year effective January 1, 2019, noting that it was raised anew to P6 per liter in January 1, 2020 with gasoline excise tax.

Bloomberg news, meanwhile, reported that some presidential aspirants are looking at either cutting or suspending taxes on oil, as fuel prices rise ahead of elections in May of next year.

Manila Mayor Isko Moreno on Thursday said he plans to cut taxes on oil and power by as much as 50 percent. Senator Panfilo lacson called on the government to suspend excise taxes on oil, while former Senator Ferdinand “Bongbong” Marcos Jr. asked for the same after a meeting with transport groups.

Poe said for gasoline, the excise tax, which was set at P8 per liter in January 2018, went up to P9 in January 2019 and to P10 per liter in January 2020.

The lawmaker lamented, “Domestic oil prices have been increasing for eight consecutive weeks,” stressing that the Duterte administration “can alleviate this heavy burden by suspending the collection of the excise tax for now.”

In a news statement issued on Friday, Poe reminded that while the government lowered tariffs on pork and rice this year, “It should also move for the suspension of excise tax on fuels in looking after the most vulnerable.”

at the same time, Poe reminded concerned authorities that “food and transportation account for a big chunk of spending by majority of Filipinos. She added “suspending the excise tax on fuel in the meantime will help stave off hunger, assist PUV [public utility vehicle] drivers and delivery riders, and bring down the cost of transporting goods.”

energy Secretary alfonso cusi, in an interview with abs-cbn news this week, said he raised with the Department of Finance the possibility of suspending excise taxes on oil. Finance Secretary carlos Dominguez has yet to comment on the proposal, while the central bank has said the nation can accommodate oil price hikes without breaching its 2-percent to 4-percent inflation target next year.

oil companies in the Philippines—a net energy importer—raised prices this week, resulting in net increases year-to-date of domestic gasoline and diesel costs. Supply-side issues, mainly from food, have kept annual inflation above the central bank’s goal this year, adding pressure to households amid a slow economic recovery.

“every major candidate has a populist agenda,” said Michael Ricafort, chief economist at Rizal commercial Banking corp. in Manila, adding that inflation can be a major campaign issue. “But even without the elections, that would be requested. It’s something called for by the situation.”

citing budget documents, Poe pointed out that excise tax collection from fuels and oils amounted to P42.7 billion in 2019 and was programmed to amount to P41.6 billion in 2020, noting it is projected to add up to P47.9 billion this year.

She recalled that in 2019, income tax collection from companies and enterprises amounted to P586.16 billion and was programmed at P329.89 billion in 2020, adding that it was projected to amount to P304.83 billion this year.