DOE, DTI urged to monitor premature fuel price hikes
The Departments of Energy (DOE) and Trade and Industry (DTI) should work hand in hand and activate a task force that will guard against premature price increases and possible profiteering with the implementation of a new round of increases in the excise tax on fuel next month so as not to exacerbate inflation, according to Sen. Sherwin Gatchalian.
President Duterte has given his approval for the imposition of an additional increase of P2.24 per liter of diesel and gasoline under Republic Act 10936 or the Tax Reform for Acceleration and Inclusion (TRAIN) law.
“Now that President Duterte approved the implementation of the second tranche of the fuel excise tax next year, the DOE and DTI should be vigilant to ensure there will be no hoarding and profiteering,” Gatchalian said in a statement.
Starting tomorrow, New Year ’s Day, the tax on diesel will go up by P2 per liter, from the current P2.50 to P4.50, while the levy on gasoline will increase also by P2 to P9 per liter.
The excise tax on cooking gas or liquefied petroleum gas will jump by P1 per kilogram to P2.
The tax on bunker oil, which is used for producing electricity, will rise from P2.50 to P4.50 per liter.
Levies on other oil products like asphalt and waxes will go up from P7 to P9 per liter or kilogram. Aviation gas will remain taxed at P4 per liter.
Lawmakers have said the second round of adjustment, like the first tranche this year, would be higher than the actual tax hike of P1 to P2 because the TRAIN law imposes a tax on tax: the increase will be levied the 12-percent value added tax.
Thus, they said the P1 tax increment would actually be P1.12, while P2 would be P2.24.
The second round of increase is expected to cause a domino effect on prices of products and services, including transportation, fares and electricity. This year’s steady rise in consumer prices – economists call it inflation – was largely blamed on the TRAIN law.
Gatchalian said the estimated rate impact on pump prices due to these tax hikes would be around P2 to P3 per liter, while the estimated rate impact on coal is around P0.048 per kilowatt-hour for 100-percent coal contracted power distribution utilities.
The senator urged the DOE to first scrutinize its inventories of petroleum crude oil and products before it allows oil companies to impose fuel price hikes as a result of the implementation of the second tranche tax.
He said there are unscrupulous oil retailers who will take advantage of the latest round of tax hikes by increasing the prices of fuel products that were imported prior to the implementation of the latest tax regime.
Citing DOE’s Department Circular No. 2003-01001 or the Implementing Guidelines for the Minimum Inventory Requirements of Petroleum of Oil Companies and Bulk Suppliers, Gatchalian said oil companies must maintain a minimum inventory equivalent to a 15-day supply of petroleum products.
The senator, however, noted that the DOE had difficulties in monitoring the end inventory of bulk suppliers and oil companies and withdrawals from the depots of oil stock a month before TRAIN law took effect last January.