Fuel tax suspension eyed amid fluctuating pump prices

A lawmaker said on Tuesday, January 31, the temporary provision regarding the automatic fuel tax cut under the Tax Reform for Acceleration and Inclusion (TRAIN) law should be made permanent to bring down the cost of fuel and provide instant relief to the Filipino people.

In a statement, Representative Luis Raymund Villafuerte said TRAIN law’s provisional authority to suspend the fuel excise tax whenever the $80-price cap breach ended in 2020.

Villafuerte said the proposed tax suspension aims to shield ordinary Filipinos from “further adversities that may be caused by unforeseen economic downturns.”

“Geopolitical conflicts and other developments in world markets have been driving up the cost of petroleum products, which, in turn, have jacked up transportation expenses and food prices, responsible for the seemingly unending elevated inflation that now threatens to slow the global economy and possibly even lead to recession in most parts of the world,” Villafuerte said.

He cited the Philippine Statistics Authority report that inflation soared to a 14-year record of 8.1 percent last December, the highest since the 9.1 percent clip in 2008 and the ninth consecutive month in 2022 that the pace of commodity price hikes breached the target range of two to four percent set by the Bangko Sentral ng Pilipinas.

He stressed the need to find a “surefire way” to cushion the economic impact on ordinary Filipino consumers of the fluctuating fuel prices, noting that the most feasible means to do this is through the permanent suspension of the excise tax imposed on petroleum products whenever the global rate hits the TRAIN-set threshold of $80 per barrel over a three-month period.

“This is the best way for Malacañang and the 19th Congress to take the edge off the economic shock inflicted on our consumers by the neverending rise in the cost of living, especially now when Filipinos are barely recovering from the almost three-year global economic and health crises caused by the COVID-19 pandemic,” he said.

The excise tax is currently pegged at P10 per liter of regular and unleaded premium gasoline and P6 per liter of diesel, he noted.

“Add to this the VAT [value-added tax] of 12 percent, and anyone could see how taxes have resulted in the hefty increase not only in the price of fuel itself but also in the cost of other goods that rely on fuel for their production and/or transportation,” he said.

He added the retail cost of gasoline and diesel went up by P1.30 and P1 per liter, respectively, on Tuesday, the third successive upward adjustment in pump prices this January.

Prior to this week’s round of adjustment, a monitoring report by the Department of Energy showed that prices since the start of January have already logged per liter net increases of P5.90 for gasoline and P2.05 for diesel.