House ways and means panel OKs bill suspending excise tax on oil products

The House ways and means committee approved on Thursday the substitute bill on the proposed measures recommending the reduction or suspension of the excise tax on fuel products amid their increasing prices.

The substitute bill was primarily based on House Bill 10438, which was authored by panel chairman, Albay Representative Joey Salceda.

The approved bill aims to reduce excise taxes on diesel, kerosene, and liquified petroleum gas to zero. Excise taxes on low-octane gasoline, which is often used by tricycle drivers, will also be reduced to P4.35

On the other hand, the taxes on premium gasoline will be retained at P10.

The suspension on the excise tax will be for six months, the measure stated.

“It’s immediate relief for Filipino families, especially affected sectors. The bill will cost the government around P45 billion, but what the government loses, the consumer gains,” Salceda said.

“We embedded a mechanism for reverting it back to TRAIN rates if the prices normalize. If it goes back to 65 dollars per barrel of crude oil, then the excise tax rates will also normalize,” he added.

The lawmaker is hoping to turnover the bill to the Senate by the third or fourth week of November given that it is a priority measure of Speaker Lord Allan Velasco.

Meanwhile, the measure also creates a special fund that will be allotted for providing assistance to the affected sectors whenever oil prices increase.

The Social Impact Stabilization Fund will be budgeted by a charge of P2 per liter of diesel and gasoline when global prices reach lower than 45 USD per barrel of crude.

“The government manifested in our hearings that the problem with asking for a subsidy that is larger than their P1 billion fund for PUVs is the lack of sources. This one answers it for future oil price problems," Salceda said.

“The 30-year average for crude is at around 48 USD per barrel. So, the prices will have to be abnormally low for the system to kick in. Basically, it addresses the cyclicality of prices. When they are too low, we can charge more so that we have funds in reserve for future ayuda. When the prices are high, we can release these funds to the public,” he explained. — RSJ, GMA News