The proposed suspension of excise taxes on fuel will affect the country’s road to recovery from the impact of the COVID-19 pandemic, Finance Undersecretary and chief economist Gil Beltran said Monday.
“The unrealized public spending and investments from the foregone revenues will be detrimental to our economic recovery and long-term growth,” Beltran said.
Meanwhile, the country’s oil firms cut pump prices by P0.90 per liter for gasoline and P0.10 per liter for kerosene effective 6am Tuesday to reflect the movement of prices in the world oil market. The oil firms, however, did not move diesel prices.
Also, the House of Representatives is scheduled to approve this week a consolidated bill seeking to reduce excise taxes on diesel, gasoline, liquefied petroleum gas (LPG), and other oil products for six months.
Earlier, there were calls for the government to suspend the excise tax on fuel to address the recent spiral in oil prices.
Beltran said a more equitable way to address the impact of higher fuel prices “is to provide targeted support to the vulnerable groups, particularly the transportation sector, which the government has already committed to do.”
The Department of Finance (DoF) estimates that suspending all fuel excise taxes and value-added tax on fuel excise will result in foregone revenues amounting to P147.1 billion or around 0.7 percent of the gross domestic product in 2022.
If the tax suspension covers only the fuel excise taxes and the VAT on fuel excise under Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the government is estimated to lose P119.5 billion or around 0.5 percent of GDP in the same year.
While consumption will be slightly higher at an estimated incremental of 0.6 to 0.7 percentage points, growth will be lower by 0.1 to 0.2 percentage points, if the excise tax and VAT on it are suspended.
Higher-income households are estimated to benefit 60 percent more than lower-income households from the suspension of fuel excise taxes.
With the tax relief that would accompany the suspension of fuel excise taxes, the disposable income of the top 10 percent of households is estimated to increase by around 0.63 to 0.82 percent on average in 2022.
Meanwhile, the disposable income of the bottom 50 percent of households is estimated to increase by only around 0.34 to 0.45 percent.
The government has already committed to releasing P1 billion in cash grants for around 178,000 public utility vehicle drivers for the remaining months of the year through the Land Transportation Franchising and Regulatory Board.
Once spent, the cash grants are estimated to result in an incremental P2.9 billion pesos-worth of growth in the economy.
“Petron will implement the following price rollbacks effective 6 a.m. on Nov 16: P0.90/li rollback for gasoline; P0.10/li rollback for kerosene. These reflect movements in the international oil market,” Petron Corp. said in its advisory.
Aside from Petron, Phoenix Petroleum Philippines, Chevron Philippines, PTT Philippines, Seaoil Philippines, PetroGazz, Cleanfuel, and Flying V also cut pump prices.
Unioil Petroleum Philippines said over the weekend fuel prices will have mixed movement this week.
On November 9, the oil companies also cut pump prices. Gasoline went down by P1 per liter, as diesel and kerosene by P0.60 and P0.65 per liter respectively.
These resulted in the year-to-date adjustments to stand at a total net increase of P20.95 per liter for gasoline, P17.50 per liter for diesel, and P15.09 per liter for kerosene. Crude prices declined after the US increased its inventory, a slowdown in the Chinese economy, and rising cases in China impacting the demand.
“Congress should pass it soon to provide relief to our people, who are suffering from the double whammy of Covid-19 pandemic and high fuel prices,” Deputy Speaker and Cagayan de Oro City Rep. Rufus Rodriguez, one of the authors of the bill, said.
Rodriguez made the statement as the House began Monday the deliberations on the measure.
Rodriguez has authored House Bill 10411, which seeks the suspension of excise tax increases on petroleum products imposed under Section 43 of Republic Act10963, or the Tax Reform Acceleration and Inclusion (TRAIN) Law, for four years, from 2022 to 2025.
That is the period economists expect the country to recover from the raging pandemic, the Mindanao lawmaker said.
For his part, Anakalusugan Rep. Mike Defensor has filed another bill proposing to suspend oil excise tax adjustments under TRAIN for three years, from 2022 to 2024.
The Rodriguez and Defensor proposals both cover the entire amount of increases, ranging from P3 per liter or kilogram in the case of LPG to P9.50. Also, they would apply to all products. With Alena Mae S. Flores and Maricel V. Cruz