By Kenneth Christian L. Basilio, reporter
the house of Representatives Wednesday passed the second day President Ferdinand R. Reading of a bill authorizing Marcos, Jr.
It comes a day after it was taken up for the first time by the House Committee on Ways and Means as lawmakers aim to equip the government with tools to rein in rising oil prices.
In a voice vote, lawmakers approved House Bill (HB) No. 8418, which sought to grant the President the power to suspend or reduce excise taxes on petroleum products for more than six months during national and global emergencies.
The measure will allow the government to “quickly respond to extraordinary fuel price volatility and stabilize domestic fuel prices during periods of severe economic disruptions.”
The approval of the bill comes at a time when the Iran war has spread to 12th The next day, oil prices rose after Tehran cut off energy shipments from the Middle East going through the Strait of Hormuz, a vital waterway through which a fifth of global oil and gas supplies pass.
As a net importer of oil, the Philippines is highly sensitive to sharp fluctuations in global oil prices.
Under the bill, the President can suspend or reduce the collection of excise duty on petrol if the average price of crude oil in Dubai, based on the average of the Platts Singapore benchmark, reaches or exceeds $80 per barrel for a month before the suspension or reduction order is issued. The Development Budget Coordination Committee will have to give recommendations to the President.
The bill states that any order suspending or reducing excise taxes due to emergencies or disasters must be certified by the Secretary of Energy confirming that pump prices have increased “extraordinarily” as a result of the disaster.
“Suspensions may be applied to specific petroleum products and may be implemented as a complete suspension or partial curtailment,” the measure said.
The Philippines imposes an excise tax of P10 per liter on gasoline, P6 per liter on diesel, and P5 per liter on kerosene under the Tax Reforms of Acceleration and Inclusion Act 2017. It had earlier allowed the government to suspend the collection of excise duty on petrol for three consecutive months if world oil prices reached $80 a barrel, but this provision had expired six years ago.
According to HB No. 8418, any suspension or reduction in the fuel excise tax rate may be extended for no more than six months through a joint congressional resolution. It states that any extension cannot last for more than one year.
The bill also requires the President to submit to Congress within 15 days of issuing such order a “factual basis” for withholding or cutting the gasoline excise tax, including an estimate of the revenue foregone and the impact on inflation, fuel prices, and economic activity, as well as follow-up monthly reports.
It said the President can suspend or reduce excise duty collection on fuel products only till December 31, 2028.
During the plenary session, Marikina Rep. Romero “Miro” S. Quimbo, who heads the House Committee on Ways and Means, said lawmakers opted to give the President the power to suspend fuel excise taxes until 2028 so that he would have additional authority to quickly ease the oil crisis.
“We don’t know how long the war in the Middle East will last,” he said in Filipino.
Estimates from the Department of Finance showed that suspending excise tax collection could result in P136 billion of lost revenue, further widening the government's budget deficit and increasing the country's debt.
Department of Economy, Planning and Development Secretary Arsenio M. Balisacan had said that the revenue loss from the suspension of excise taxes on gasoline could reach P43.3 billion if the suspension lasts three months, and P106 billion if extended until September.
“The loss of government revenue, while painful, will not immediately bring down our economy,” Mr. Quimbo said. “It's for the good of the people.”
Funding for government programs, particularly aid for groups sensitive to the Middle East conflict, would take an initial blow under the proposal, with the impact on state finances expected to deepen as the war drags on, said Leonardo A. Lanzona, an economics professor at Ateneo de Manila University.
“The important thing is how long this crisis will last,” he said in a Facebook Messenger chat. “If it is low, the excise duty suspension may provide some temporary but mainly marginal relief.”
“But if the crisis prolongs, the negative effects of reducing or suspending the excise tax will be significant,” he said.
John Paolo R., a senior research fellow at the Philippine Institute for Development Studies. Rivera said the government should pursue targeted tax relief rather than blanket measures, warning that sweeping tax cuts could increase the budget deficit.
“The best response is to limit tax relief for the duration of the extreme oil shock, combine it with reprioritization of spending, and strengthen collection efficiency in other areas such as value-added tax, customs duties and digital taxation,” he said in a Viber message. “It will also help focus support on the most affected sectors such as public transport and agriculture Instead of giving subsidy to all fuel users.”