House bill proposes 6-month reduction of fuel product’s excise tax

House Committee on Ways and Means chairperson and Albay Representative Joey Salceda on Tuesday proposed a six-month reduction of the excise tax on petroleum products as a response to the increasing prices of fuel products.

In filing House Bill 10438, Salceda said the reduction on the excise tax of fuel products should be imposed from December 1, 2021 to June 1 of 2022 as the rise of prices of petroleum products could be a “serious dampener to economic recovery and price stabilization.”

“This Mean of Platts Singapore (MOPS) price, which is the basis for the suspension of excise taxes under the Tax Reform for Acceleration and Inclusion Law, has already breached the USD84 per barrel for crude. The benchmark under TRAIN was USD80 per barrel, such that when the price threshold is hit, we would have suspended 2020 fuel excise tax increases," the lawmaker explained.

“The 80-USD mark was an ‘alert level.’ We are past that level. MOPS for crude is now over USD84. We should really take up a reduction in the excise taxes,” he added.

He also said diesel and kerosene should also be exempted from excise tax over the period while gasoline's excise tax must be reduced from P10 per liter to P7. The Bicolano lawmaker said his recommendation is the most fiscally sustainable among other proposals.

“Diesel is the poor man’s transport fuel. Tricycles, motorcycle delivery riders, farmers, and jeepney drivers use diesel for their vehicles. Kerosene is the poor man’s cooking fuel. I believe that the biggest reduction should be on these commodities,” he pointed out.

“Gasoline, on the other hand, is the vehicle of use for cars and SUVs. While we should reduce gasoline excise taxes, the distributional impacts will really be much better in diesel. It is much more progressive that way,” Salceda said.

He noted that this proposal “aims to provide relief without binding the state’s fiscal resources into an unsustainable commitment.”

Salceda wrote an aide memoire addressed to Speaker Lord Allan Velasco and Majority Leader Ferdinand Martin Romualdez about his proposal, which also seeks to mitigate overall inflation and provide immediate relief to affected Filipinos.

Meanwhile, Salceda also urged the Department of Energy to be stricter in monitoring the prices of petroleum products.

“The oil deregulation law empowers them to investigate on the basis of abnormal price increases. Under this bill, I am proposing to give them motu propio power to investigate sellers for unusual price activity. The ultimate goal is that the reduction goes towards the consumer," he said. — Anna Felicia Bajo/RSJ, GMA News