Drilon: DOF can suspend excise taxes on fuel

Senate Minority Leader Franklin Drilon on Tuesday told the officials of the Department of Finance to “stop hiding behind the law” as he argued that there are no legal impediments for the taxmen to seek the suspension of excise taxes on fuel products.

“There is no stopping the executive, specifically the Department of Finance and the Bureau of Internal Revenue, from suspending the collection of excise taxes on petroleum products, if they really want to mitigate the impact of high oil prices on the cost of goods and living expenses of the ordinary Filipino,” Drilon said in a statement.

The senator said the Tax Reform for Acceleration and Inclusion Law should be interpreted “liberally” not only in light of suspending the increases in excise taxes but also in its imposition.

Drilon, a former Justice secretary, said the country is in an “extraordinary situation” that calls for “liberal application of the law and for compassion.”

“We are not seeking an exemption from taxes here and therefore a strict construction of the law is misplaced. Filipinos are suffering. The burden should be borne by the government. The government cannot just stand and hide behind the law to say that there is nothing that can be done. We cannot wait for the law to be amended before we act. The situation is changing rapidly by the day and we need to act fast,” the minority chief said.

“They implement the law. Who will blame DOF and BIR if they suspend the excise taxes on fuel products? Who will file a case against them? Whose rights will be violated if the taxes are suspended? Please stop hiding behind the law. The TRAIN law does not intend to tie the hands of the government and prevent it from responding to shocking increases in oil prices to the detriment of consumers,” he added.

Drilon then argued that the intention of the TRAIN Law is to provide the DOF the “power to arrest” possible inflation with the provision wherein the increases of excise taxes would be suspended should the price of oil per barrel exceeds $80.

This provision, however, had already expired in 2020 as earlier pointed out by Senator Panfilo Lacson.

“Clearly, the spirit of the law is to give the government elbow room to address situations where the price of crude oil in the world market exceeds 80 [US dollars]. The law acknowledges that such a scenario will drive inflation to unconscionable levels – a scenario which we want to prevent, mitigate and arrest,” Drilon said.

Under the TRAIN Law, the lawmaker said the DOF may recommend the implementation or suspension of the excise tax on fuel based on an annual review.

“We should be mindful of the purpose in putting safeguards in the law. It was to cushion the inflationary effects of fuel prices and the untold hardships it will bring on our citizens,” Drilon emphasized.

“If the DOF wants to suspend the collection of taxes, it can. It has done so in the past,” he further pointed out.

He recalled that in December 2021, the Bureau of Internal Revenue has suspended the imposition of the 12% value added tax on exporters’ purchases after vehement objection from concerned stakeholders.

The BIR, however, said the postponement is solely due to the COVID-19 pandemic, Drilon noted.

Under the TRAIN Law, Drilon said transactions which were previously zero rated shall be subject to 12% VAT after the government has established an enhanced VAT refund system and has fully paid all pending claims for refund.

“The government was able to establish such a system but the imposition of the 12% was suspended nonetheless,” Drilon said.

Several lawmakers have expressed support to the suspension of excise taxes on fuel products as an immediate relief amid the continuous rise in oil prices.—LDF, GMA News