Senate panel pushes for fuel excise tax suspension

The Senate committee on public services on Friday urged the government to suspend excise taxes on fuel as allowed by law, even as the public continues to reel from rapidly rising commodity prices.

Senator Grace Poe, who heads the panel, said she would ask her colleagues to support the initial recommendation of the committee, after conducting a public hearing in Iloilo City on the effects of the Tax Reform for Acceleration and Inclusion Law.

This developed as the Department of Finance is proposing to Congress in the next few weeks to raise excise taxes on the so-called “sin products” despite their impact on inflation.

Finance Secretary Carlos Dominguez told reporters raising taxes on cigarettes and alcoholic drinks would make the people think first before they buy or consume these products.

Raising excise taxes on sin products was not based on the idea of raising revenues that could be derived from them, but to “discourage the consumption of these products,” Dominguez said. 

Meanwhile, workers under the Partido Manggagawa demanded that the government grant all workers a wage increase even in the absence of wage petitions due to the supervening event of rising prices for basic commodities and fuel.

The party said there was an immediate need to raise the minimum wage for all workers because of the continuing rise in prices for basic needs and oil products, following a similar demand from the Associated Labor Unions-Trade Union Congress of the Philippines on Thursday.

During the hearing, senators were told that pump prices in Panay have already increased 30 percent or at least P10 for diesel and gasoline since December last year. The region already registered price increases for rice (P5 per kilo), pork (P15 per kilo) and fish (P20 per kilo).

Farmers also have to fork out an additional P2,600 a month and a worker has to spend P3,640 more after the passage of the TRAIN Law, the Senate panel was told.

Consumer groups in Panay say the TRAIN Law and increasing fuel costs have driven up commodity prices.

Since the law’s implementation in January this year, the average price increase has been P8.07 per liter for gasoline, P8.95 for diesel and P9.15 per liter of kerosene.

MAKING NOISE. Some students from the left-leaning League of Filipino Students stage a protest Friday against the effects of Tax Reform for Acceleration and Inclusion in Divisoria, Manila, a chaser to militants’ call for higher wages than tax reform. Norman Cruz
Calls for fuel excise tax suspension snowballed as consumer prices rose 4.5 percent in April compared to a year ago, setting its fastest pace in over five years.

Senate President Vicente Sotto III, however, said he would leave it to economic experts to decide on the suspension of the excise tax—even as other senators called for its immediate implementation.

“I leave the timing to economic experts,” Sotto said. “I’m not an economist.”

But Senator JV Ejercito said suspending the excise tax on fuel would serve the interests of consumers and the public.

“I urge government to implement the TRAIN Law provision that provides for the suspension of fuel excise tax.. when the average Dubai crude oil price based on Mean of Platts Singapore (MOPS) for three months prior to the scheduled increase of the month reaches or exceeds $80 per barrel,” Ejercito said.

Inflation has reached 4.5 percent in April and the price of crude oil is nearing $80 per barrel as prices of gasoline have shot up by more than P8 since January 2018.

Ejercito said that while he understands the need of government to increase revenues, it must give priority to protecting the public, which is bearing the brunt of high prices, which are eroding any advantage in lower income taxes.

Ejercito said it is precisely the protection of the public, especially the poor that led the Senate to approve a version of the TRAIN Law that has a lower excise taxes at P1.75 and a safeguard that suspends the excise taxes when inflation breaches 4 percent.

However, he said this safeguard was taken out in the bicameral conference committee version.

Senator Paolo Benigno Aquino IV challenged the government to act now and rollback the excise taxes on petroleum products under its tax reform program to lift the burden of high prices on the Filipino people, especially the poor.

The senator who voted against the ratification of the TRAIN made this pronouncement after the Department of Energy declared that the TRAIN Law allows for immediate suspension of excise taxes on petroleum products.

However, the DoE said the suspension would only cover the additional excise tax due for 2019.

“Next year is too late. The public is already suffering too much because of high prices,” Aquino said in a mix of English and Filipino.

In a privilege speech on Wednesday, Aquino emphasized that one of the ways to alleviate the burden of the people is to suspend the excise tax on petroleum products under the TRAIN Law.

In a statement, the labor group said a supervening event from the sharp inflationary impact of the TRAIN Law is enough reason for the government to consider wage hikes even in the absence of wage petitions.

The labor group said that a budget of P500 is not enough for a family of four to have three meals a day and pay for the cost of electricity, water and transportation.

Topics: Senator Grace Poe , Tax Reform for Acceleration and Inclusion Law , Department of Finance , Finance Secretary Carlos Dominguez
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