EO sought to suspend oil excise taxes

Published October 20, 2021, 3:35 PM

by Myrna M. Velasco

With global oil prices hitting multi-year high of US$85 per barrel and traders already betting on a $200 per barrel oil, the Department of Energy (DOE) is pushing for the issuance of an Executive Order (EO) by the President so excise taxes on petroleum products could be temporarily suspended.

Energy Secretary Alfonso G. Cusi indicated that an EO is one of the legal options being sorted by the department; while the other possible approach is to seek Congressional amendment to the Tax Reform for Acceleration and Inclusion Act (TRAIN) or Republic Act 10963 — primarily on the provision enforcing excise taxes on oil commodities.

“We want to ask the President for an EO to do it; if we cannot do it through EO, we wrote Congress to pass an amendment to the law,” the energy chief stressed.

If the excise taxes on petroleum products will be temporarily shelved, prices for gasoline products will be reduced by P10 per liter; while diesel products will be cheaper by P6.00 per liter.

For kerosene products used by households and other industries, this will be brought down by P5.00 per liter; while for kerosene used in aviation fuel, the price cut will be P4.00 per liter.

Further, the price of liquefied petroleum gas (LPG), which is the most common fuel being utilized for household cooking, will likewise be trimmed by P3.00 per kilogram, if the TRAIN-imposed excise taxes will be scrapped while oil prices are on astronomical rise.

Cusi expounded for the excise taxes’ enforcement to be ceased for the time being, the most logical step could be for the TRAIN law to be amended by Congress.

Beyond the propounded EO from Malacanang or a legislative imprimatur to defer State’s collection of excise taxes for petroleum products, the DOE is similarly asking Congress to amend Republic Act 8479 or the Downstream Oil Industry Deregulation Act – and the agency’s major plea is to allow ‘fuel cost unbundling’ policy to be instituted in the oil price monitoring mandate of the government.

Cusi said there must be a legislated framework “for the government to intervene and address sudden, prolonged oil price spikes, including the unbundling of the cost of petroleum retail products to determine their true and pass-on costs.”

As reiterated by the energy department, “the unbundling of oil prices would result in greater market transparency by establishing trends in the prices of oil and finished petroleum products.”

The DOE qualified that if the costs being passed on at the pumps are itemized and transparent, “this would help ensure a level playing field within the oil industry, while upholding the best interest of consumers.”

A bill that was already lodged in the House of Representatives is a measure seeking to revert the oil industry into a ‘regulated regime’, so the government can control price spikes being implemented by the oil companies.

Bayan Muna Representative Carlos Isagani Zarate, the proponent of House Bill 4711, pointed out that “with today’s big time oil price hikes, it is imperative that the downstream oil industry be again placed under regulation to protect our much-burdened consumers.”

The lawmaker further noted “there is a pressing need to regulate the oil industry to protect the majority of Filipinos from current runaway increases in oil prices.”

In the bill, Zarate recommended the creation of Petroleum Regulatory Council to oversee the downstream oil industry – including its tenet of pricing; and a ‘buffer fund’ shall also be established “to cushion the impact on consumers against drastic increases in petroleum prices.”

 
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