Senate looks into oil tax, TRAIN

The Senate committee on energy is set to examine the government’s strategy to ensure energy security amid skyrocketing world oil prices.

Senator Sherwin Gatchalian, panel chairman, noted that diesel and gasoline prices have shot up by as much as P5.45 and P6.30, respectively, from July 25, 2018 prices, and said these prices have been exacerbated by the fuel excise tax imposed under the Tax Reform for Acceleration and Inclusion Law (Republic Act No. 10963).

READ: More oil players cut pump prices big time

Finance Secretary Carlos Dominguez III, however, said the imposition of an excise tax on fuel added very little to pump prices, referring to the additional P2 that would be added to the cost of gasoline and diesel in 2019 under the TRAIN Law.

“This tax is not responsible for the spiral in fuel prices, Donald Trump is. The global market, over which we have no control, is responsible for this,” Dominguez said.

Dominguez, however, did not mention the excise tax that was already imposed on diesel (P2.50) and gasoline (P7) starting in 2018 under the first tranche of excise taxes under the TRAIN Law.

At the current rate of P60 a liter for gasoline, the existing excise tax of P7 would account for 11 percent of its price.

Dominguez said the imposition of the excise tax was completely justified “considering the social and environmental impact of fossil fuel consumption.”

“Compared to excise taxes imposed on the same products elsewhere, the one imposed by the new tax reform law is negligible,” the Finance chief said.

Amid soaring gas prices, lawmakers have called for a suspension of the increase in the excise tax on fuel scheduled for Jan. 1, 2019, and some have even called for a rollback of the taxes imposed in 2018.

Dominguez said the economic managers have recommended the suspension of the tax increase for next year, if the average price of oil stays above $80 per barrel, as provided under the TRAIN Law.

Dominguez also acknowledged that TRAIN has added to inflation.

“There is no question TRAIN contributed to the elevated inflation rate. The excise taxes imposed on sugary beverages and on cigarette products reflect in higher prices. Those higher prices were intended,” he said.

Dominguez said the higher taxes on sugar and cigarette products were meant “to dissuade consumption of harmful products.”

In his resolution, Gatchalian said the DOE is the agency mandated to carry out the policy of energy self-reliance and self-sufficiency through integrated and intensive exploration, production, management, and development of indigenous energy resources; and to rationalize, integrate, and coordinate the various programs of the government towards self-sufficiency.

“DOE has committed to implement measures to mitigate the effects of the continuous price increase in the world market, and to oversee the proper implementation of TRAIN, in so far as taxes on petroleum products are concerned,” Gatchalian said.

“Despite these efforts, it is necessary to be apprised of DOE’s strategic framework to achieve energy security and energy self-sufficiency to prevent similar situations from arising in the future,” he added.

READ: Tax freeze to curb inflation-DoF

Topics: Sherwin Gatchalian , Tax Reform for Acceleration and Inclusion Law , Carlos Dominguez III , Donald Trump
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