TRAIN Law author bats for reduction of excise tax on fuel

A principal author of the law that imposed excise taxes on fuel is now seeking the reduction of the much-criticized imposition but with an effectivity of just six months - from December 1, 2021 to June 1, 2022.

Albay Rep. Joey Sarte Salceda

Albay Rep. Joey Sarte-Salceda, chairman of the House Committee on Ways and Means, filed House Bill 10438 that recommends the reduction of the fuel excise taxes on diesel, kerosene and gasoline.

Salceda was among the principal authors of the Tax Reform for Acceleration and Inclusion (TRAIN) Law that mandated excise taxes on petroleum products which government has been collecting since its passage in 2018.

Congressmen and various sectors adversely affected by the almost weekly hike in prices of petroleum products have issued strong appeals for the government to forego of the excise taxes that have added to the economic burden Filipinos are facing as a result of the adverse effects of the COVID-19 pandemic.

Salceda said the sustained adjustments in fuel cost “could be a serious dampener to economic recovery and price stabilization.”

“This Mean of Platts Singapore (MOPS) price, which is the basis for the suspension of excise taxes under the Tax Reform for Acceleration and Inclusion Law, has already breached the USD 84 per barrel for crude. The benchmark under TRAIN was USD 80 per barrel, such that when the price threshold is hit, we would have suspended 2020 fuel excise tax increases.” said Salceda.

However, this provision of the TRAIN law is no longer in effect because of a sunset provision included therein.

Salceda admitted that the $80 per barrel benchmark has been breached

“The 80 USD mark was an ‘alert level.’ We are past that level. MOPS for crude is now over USD 84. We should really take up a reduction in the excise taxes,” Salceda said.

In HB 10438 Salceda proposed exempting diesel and kerosene from excise taxes over the period, while gasoline excise taxes will be reduced from P10 per liter to just P7.

“Diesel is the poor man’s transport fuel. Tricycles, motorcycle delivery riders, farmers, and jeepney drivers use diesel for their vehicles. Kerosene is the poor man’s cooking fuel. I believe that the biggest reduction should be on these commodities,” he stated.

“Gasoline, on the other hand, is the vehicle of use for cars and SUVs. While we should reduce gasoline excise taxes, the distributional impacts will really be much better in diesel. It is much more progressive that way,” the administration solon added.

He insisted that the proposal is the “most fiscally sustainable” among all existing proposals.

The Makabayan bloc has called for the scrapping of the excise tax, pointing out that this would cushion the impact the current economic crisis has on ordinary Filipinos.

ON the other hand, the Department of Finance has urged Congress to pass a law that would clothe it with powers to suspend excise tax collection under certain conditions.

“My proposal aims to provide relief without binding the state’s fiscal resources into an unsustainable commitment. The DOF’s full year estimate of a total suspension of fuel excise tax is upwards of P130 billion,” Salceda argued.