Senators tracking oil outlook as call to halt excise taxes mounts
SENATORS are closely tracking the international oil outlook to firm up better policy advice on whether excise tax on fuel should be suspended as sought by various quarters that point to the inflationary impact of spiralling oil price hikes.
“It will be a big bag of solutions,” said Sen. Sherwin Gatchalian, chairman of the Senate Committee on Energy, indicating they are particularly monitoring developments in the Russia-ukraine war, the chief factor seen driving oil prices in the world market.
He revealed in an interview with CNN Philippines’s “The Source” his plan to conduct a hearing next Tuesday (June 21). “Look at a scenario wherein this issue will be prolonged, meaning what if the crisis will last in the next six months to 12 months? We have to be ready because we have to make sure that we have enough budget to give subsidies and what will be the super ultimate solution to help our constituents.”
Asked if he is still not considering suspending excise taxes and VAT on petroleum products, now that global oil has hit $120 per barrel, and the TRAIN law had provided for suspension options at a certain threshold, Gatchalian replied, “if this will be prolonged, like I said, this will extend for the next six to 12 months, then that’s on the table right now.”
Gatchalian had earlier frowned on suspending excise tax on oil, agreeing with economists’ views that it is “anti-poor” as it will only help mostly car owners. The tack has been to just ramp up subsidies or “ayuda” to transport workers.
However, he noted to CNN Philippines’s Pinky Webb on Tuesday that “the fuel subsidies only help our public utility drivers. It only helps our fishermen, in terms of direct subsidies, but the middle class is also being squeezed out because the middle class, they have their vehicles, they also have businesses that require fuel. So the middle class is also being squeezed out. So that’s the essence of looking at suspending excise tax.”
He expressed hope that at Tuesday’s hearing “we will get all the data together. I think the bottom line here is we have to expect for the worst in a prolonged scenario.”
He confirmed that, “I’m looking to suspend excise tax, possibly VAT if necessary. But I think excise tax is easier to administer than VAT. But on a matter of principle I’m looking, I’m also open to looking at that if the situation gets prolonged.”
Moreover, he also noted that “policymakers in Europe are seeing that the sanctions might stay until President Putin is there. So that’s a very long time.” So, he added, if sanctions remain in place, then global fuel prices will remain “elevated at around $100 per barrel, and that’s going to be very tough for a lot of our PUVS and our middle class.”
The Philippines, he added, must “expect the worst, meaning, a prolonged scenario, and what will happen also when the sanctions hit. Because when the sanctions hit, obviously the other countries will probably source their fuel from where we source it,” likely easing out the Philippines and forcing it to get fuel from more expensive sources.
He observed that the economic managers “were expecting a shortterm very quick aberration in the oil prices because everything will go back to normal, but it doesn’t seem that way. It seems to me that the Ukraine crisis will be prolonged. I don’t know when but definitely it will be prolonged for until the end of the year probably.”