The suspension of the additional excise tax on fuel under the Tax Reform for Acceleration and Inclusion Law will address inflation worries next year, a Finance official said Tuesday.
“The economic managers support the suspension of the second tranche of the oil excise to anchor the inflation expectations and intensify government actions against hoarding and profiteering,” Finance Assistant Secretary Antonio Lambino II told Palace reporters Tuesday.
He said the mechanism included in the TRAIN law suggests that if the index selling price of oil in Dubai reaches at least $80 per barrel on the average of three consecutive months, the government can suspend the excise tax on oil.
Such a suspension will cap the increase in the price of both gasoline and diesel.
He also said capping the increase in the fuel excise tax could stop companies and households from hoarding oil products when they believe prices will go up.
Lambino said that while the new round of excise taxes due in January 2019 may be suspended, removing the existing excise tax as some groups have urged would require legislation.
On Monday, the Palace said President Rodrigo Duterte will definitely order the temporary suspension of the excise tax on fuel.
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“Definitely, there is a decision [to suspend excise tax on oil]. It was even the President who made that announcement,” Presidential Spokesman Salvador Panelo said in a Palace briefing Monday.
“There will be a paper documenting that. We will wait for it,” he said.
The TRAIN Law imposed an excise tax of P2.50 per liter of diesel and raised the tax on gasoline from P4.35 a liter to P7 a liter.
According to the law, the excise tax on diesel will go up to P4.50 a liter in 2019, while the tax on gasoline will go up to P9 a liter.
By 2020, the excise tax on diesel and gasoline will be P6 a liter and P10 a liter, respectively.
Senator Grace Poe urged the government to bring prices down, and stop concerning itself with “some highfalutin interpretation of the economy.”
Poe, who was among the 17 senators who asked President Duterte to support calls from both Houses of Congress to suspend further increases in the excise taxes on diesel, gasoline, and other petroleum products for 2019 and 2020.
She said while the government has been quick to collect the new taxes, it has moved slowly to act on provisions of the TRAIN Law that would provide relief, particularly to the poor.
“I feel that we’ve kind of been double-crossed,” she said.
Poe and the reelectionists Cynthia Villar and JV Ejercito voted in favor of the TRAIN Law but said they do not regret it.
They said TRAIN has been widely criticized because of the executive branch’s failure to implement the law’s mitigating measures to help the poor.
“We agreed to it because there are supposed to be mitigating measures for the poorest households. However, they already collected the money and yet the help for the poor failed to reach them,” Poe said.
Villar said the country’s economic managers should have taken into consideration how many business owners supposedly took advantage of the TRAIN Law to increase the prices of basic goods.
“The bad practices of the cartels, rice, onion, garlic, should have been considered,” said Villar.
Ejercito said the Bicameral Conference Committee should have adopted the Senate’s version of the measure which provided lower rates for fuel taxes and the suspension of fuel taxes once the inflation rate breaches 4 percent, based on government estimates.
The inflation rate as of September was a nine-year high of 6.7 percent.
“I voted for that law because of the safeguards, but they were removed in the final version,” Ejercito said.
Also on Tuesday, Senator Francis Pangilinan marked World Food Day by observing that Filipinos have had to line up for affordable government rice, while some towns in Mindanao saw the price of the grain rise to P70 a kilo.
He also noted that hunger stalks an estimated 3.1 million Filipino families, who have experienced involuntary hunger at least once in the last three months, according to the latest survey.
READ: Government to slash non-infra budget after oil tax freeze
