The House Committee on Ways and Means approved Thursday, Nov. 11 the proposal to reduce or suspend excise taxes on petroleum products but not on premium gasoline with highest octane mix.

The House panel chaired by Albay 2nd District Rep. Joey Sarte Salceda approved a substitute bill that will amend provisions of the TRAIN law that impose excise tax on fuel.

Suspension of excise tax on diesel, kerosene, liquefied petroleum gas and reduction of same tax on unleaded low octane gasoline will be carried out for a six month period starting January, 2022.

The ways and means committee consolidated six pending legislative proposals that sought to reduce the burden of the uncontrolled rise in prices of petroleum products int he past several months.

Authors of the various bills and resolutions calling for relief from the excise tax imposition under the TRAIN Law are Deputy Speaker and Cagayan de Oro City Rep. Rufus Rodriguez; Reps. Michael Defensor (Anakalusugan); Mark Go (Lone District, Baguio City); Jesus “Bong” Suntay (4th District, Quezon City) and Salceda.

House Bill 243 that was filed by the six-man Makabayan bloc even before the fuel price crisis existed in 2019 was also consolidated in the approved bill.

House Deputy Minority Leader and Bayan Muna Rep. Carlos Isagani Zarate said the committee action on the measure is a “partial victory for consumers.”

"The suspension of the excise tax on oil products would be a welcome reprieve for struggling public transportation drivers and operators, farmers, fisherfolks and consumers from the still continuing oil price hikes. Though we maintain our strategic position to repeal the anti-people provisions of the TRAIN law, the approval of this urgent bill is a step at the right direction and reflects the true and dire situation of our people on the ground, who are still coping with the pandemic-aggravated crisis," said Zarate.

The Department of Finance opposed the bill as it warned that government will lose P37.4 billion in unrealized income if the measure is approved. A huge portion of the impending excise tax losses will come from diesel sales with P29.4 billion in six months.

The DOF’s offered counterproposal of providing cash subsidy to the transport sector, pointing out that P1 billion had been initially allocated for this.

Salceda rejected the offer, saying that P1 billion is “too small” compared to the impact of the rising fuel prices on the transport and agriculture sector.

The panel’s approved bill will reduce excise taxes on diesel, kerosene, and liquified petroleum gas to zero. Excise taxes on low-octane gasoline, used primarily by tricycle drivers, will also be reduced, while taxes on premium gasoline will be retained. The excise tax suspension will be for six months.

Lawmakers excluded sale on high octane premium gasoline as they pointed out that consumers to be affected are the rich who can still absorb the impact of the high fuel cost.

“It’s immediate relief for Filipino families, especially affected sectors. The bill will cost the government around P45 billion, but what the government loses, the consumer gains,” Salceda said.

The ways and menas committee included in the bill a provision creating a Social Impact Stabilization Fund which will be a mechanism funded by a charge off P2 per liter of diesel and gasoline when global prices reach lower than 45 USD per barrel of crude.

“The government manifested in our hearings that the problem with asking for a subsidy that is larger than their P1 billion fund for PUVs is the lack of sources. This one answers it for future oil price problems,” said Salceda.