Clash of Kawali - Top Leaderboard
Advertisement

Oil tax freeze snowballing

Taking cue from Duterte, senators file reso to place levy on hold

Minority senators have filed a joint resolution suspending the excise tax on fuel under the Tax Reform for Acceleration and Inclusion Law and mandating the rollback of the levy to Dec. 31, 2017 rates.

Oil tax freeze snowballing
The anticipated diminished supply of oil resulting from economic sanctions on Iran and the political and financial crises in Venezuela is pushing prices up.
With President Duterte’s latest pronouncement that the government will look into the possibility of suspending excise tax on fuel, the minority senators are hopeful that their colleagues will support the initiative.

Minority Floor Leader Franklin Drilon and Senators Francis Pangilinan, Paolo Benigno Aquino IV, Risa Hontiveros, Antonio Trillanes IV and Leila de Lima submitted Senate Joint Resolution No. 15 as they called on their fellow lawmakers to take a unified stand to suspend the excise tax on fuel.

In their joint resolution, the minority senators said there was an urgent need for Congress to intervene and mitigate the inflationary effects of rising fuel prices by suspending the increases in the excise tax on fuel under RA No. 10963.

“We are hopeful that the Senate will take a unified stance on suspending the excise tax on fuel for the millions of Filipinos burdened with the rising prices of goods,” the minority senators said in a statement.

The Department of Energy is already finalizing a draft memorandum to suspend the excise tax, Assistant Secretary Bodie Pulido said Wednesday.

He told GMA News Online the DOE will submit the memo to the Office of the President through the Executive Secretary “where we will be seeking the suspension of the second tranche of TRAIN.”

Pulido explained that under the TRAIN Law, the second tranche of excise taxes on petroleum products can be suspended if the average price of Dubai crude averages US$80 per barrel for three months before the second tranche is enforced in January 2019.

“The other indexes are a little bit higher. But the Dubai crude prices, based on our projections, will probably not breach the $80 average per month And that it would continue for three consecutive months,” he said.

But based on the DOE’s projections, the assistant secretary said the rising oil prices would come ahead of the second tranche heading into the following year, Pulido added.

The anticipated diminished supply of oil resulting from economic sanctions on Iran and the political and financial crises in Venezuela is pushing prices up, he told GMA News.

Also on Wednesday:

• Senator Juan Edgardo Angara endorsed for plenary approval a bill seeking a general tax amnesty to encourage taxpayers to pay correct taxes, raising more revenues to finance crucial government projects. The bill covers all unpaid internal revenue taxes—estate taxes, general taxes and delinquent accounts—due for taxable year 2017 and prior years.

Since the implementation of the TRAIN Law on Jan. 1, 2018, the minority senators pointed out that gasoline prices have already increased by as much as P10.50, diesel prices by P12 and kerosene by P14.12. Inflation has gone up from beyond the government’s target of 2 to 4 percent, to 6.7 percent in September.

With prices of oil in the world market breaching the $80 per barrel barrier and with the scheduled additional P2 levy on fuel in January 2019, the minority senators said there is a pressing need to suspend the excise tax under the TRAIN Law.

In May, Aquino filed a bill seeking to suspend the collection of the excise tax on fuel once the inflation rate breaches the annual target over a three-month period.

Aquino said he hopes that with the President’s willingness to consider suspending the excise taxes, the government will unite to support the move.

Senator Panfilo Lacson also welcomed Duterte’s willingness to suspend the new excise tax on fuel.

He said there is a provision in the TRAIN Law that the tax be suspended when oil hits $80 a barrel over a three-month period.

Senator Sherwin Gatchalian, meanwhile, urged to government to be more aggressive in the pursuit of energy self-sufficiency by launching a “Drill, Drill, Drill” program to explore and develop the country’s untapped oil and gas resources.

The senator, who serves as chairman of the Senate energy committee, made the call amid the latest round of global oil price hikes, which he said is one of the primary drivers of the rising inflation rate.

“The Philippines is blessed with rich natural resources throughout its exclusive economic zone and extended continental shelf, including natural gas and oil. Unfortunately, we have been unable to tap the full potential of these energy resources. Because of this, we have no choice but to import crude oil from oil-exporting countries, even if the price has become unconscionably high,” he said.

“As a result of this, Filipino commuters, vehicle owners, and public utility vehicle operators have had to suffer countless economic hardships because of volatile global oil price movements. This gives us all the more reason to pursue energy self-sufficiency,” he added.

Gatchalian said the Philippines has been importing 94 percent of its oil requirements, with the total import bill jumping to $9.89 billion in 2017, a 31.2 percent increase from the $7.54 billion import bill in 2016.

With the price of Brent crude now hitting USD84 a barrel this week, up from around $78 a barrel in July, Gatchalian stressed the need for the country to tap its own untapped oil and gas reserves throughout its islands and waters.

Data from the Department of Energy show that the country potentially has 3.5 billion barrels of oil deposits and 24.7 trillion cubic feet of gas deposits that are considered undiscovered. The DOE said only 4.6 percent or 168 million barrels of oil and 3.8 trillion cubic feet of gas had been discovered since 2016.

Despite these vast reserves of untapped resources, the DOE reports that the Philippines only has six producing service contracts, three of which are nearing depletion. In July, DOE said it is still eyeing awarding at least nine more petroleum service contracts (PSCs) through its modified Philippine Conventional Energy Contracting Program.

“It is high time for the government to launch a Drill, Drill, Drill program which will use these untapped oil and gas resources to pursue Philippine energy independence and pave the way for the country to become an energy exporting powerhouse,” Gatchalian said.

However, the senator noted that perceived instability in some of the country’s energy and economic policies have discouraged foreign players from conducting petroleum exploration in the Philippines.

Some of these controversial issues including the Commission on Audit’s ruling on the Malampaya project’s income tax, the Supreme Court ruling on the validity of service contracts signed by the Energy secretary, and the looming passage of the TRABAHO Bill.

“Investors, particularly major foreign oil and gas companies, are looking for more certainty and stability before buying into the Philippine energy sector. The government needs to address these problem areas in order for the Drill, Drill, Drill program to move forward,” he said.

Topics: Tax Reform for Acceleration and Inclusion Law , Franklin Drilon , Francis Pangilinan , Paolo Benigno Aquino IV , Risa Hontiveros
COMMENT DISCLAIMER: Reader comments posted on this Web site are not in any way endorsed by Manila Standard. Comments are views by manilastandard.net readers who exercise their right to free expression and they do not necessarily represent or reflect the position or viewpoint of manilastandard.net. While reserving this publication’s right to delete comments that are deemed offensive, indecent or inconsistent with Manila Standard editorial standards, Manila Standard may not be held liable for any false information posted by readers in this comments section.
AdvertisementGMA-Working Pillars of the House
Advertisement