By RUELLE CASTRO and WENDELL VIGILIA
The Department of Finance (DOF) remains firm in its position not to suspend the collection of taxes on oil products despite clamor from all fronts, noting it will result to inequity and will hurt the economy in the long run.
DOF assistant secretary Paola Alvarez at the Laging Handa public briefing yesterday said revenue foregone from a proposal on the automatic suspension of fuel excise tax collection when crude hits $80 per barrel is estimated at P1.5 trillion until 2032.
Also yesterday at the House of Representatives, the committee on energy approved a measure seeking to amend Republic Act 8479 or the Downstream Oil Industry Deregulation
Act of 1998 by unbundling the retail prices of domestic petroleum products and institutionalizing the minimum inventory requirements for petroleum products to ensure supply security.
Alvarez said the government is focused on providing subsidies to the most affected sectors instead of letting go of tax collections that could amount to as much as P138.8 billion just for the year alone.
Alvarez said under the present tax arrangements, those who consume the most oil products are the ones that should bear the brunt of the spike in oil prices.
Alvarez noted that 48.8 percent of oil products are consumed by high-income households while the low-income households consume just 13.8 percent of the oil pie.
Alvarez said with the current setup, any tax collected on oil products provides funding for subsidies distributed to beneficiaries as well as financing for infrastructure and social services.
Government has raised P3 billion of the planned P5-billion subsidy for public utility drivers under the Pantawid Pasada program while a P1.1 -billion subsidy is being eyed for farmers.
If pending bills are passed, Alvarez said it would mean a loss of P48.7 billion in tax collection under the House Bill 1448 that calls for the suspension of excise tax on oil between June and November this year, and P69.3 billion under Senate Bill 2445 which calls for excise tax suspension between June and December this year.
A suspension on the collection of all taxes, that include value-added tax, on oil products would mean foregoing P138.8 billion in one year, equivalent to 0.6 percent of the country’s GDP.
“As we see it, the oil spike is temporary and if we are to reduce taxes because of it, it will have more impact on us instead of just giving subsidies,” Alvarez said.
Marikina Rep. Stella Quimbo, sponsor of the measure amending the oil deregulation law, said unbundling the retail price of domestic petroleum product does not run counter to the principle of deregulation, and is, in fact, a tool to ensure its effectivity.
“The DOE (Department of Energy) must be mandated and capacitated to monitor the unbundled retail prices,” said Quimbo, an economist.
Quimbo said the government should stop using the Mean of Platts Singapore (MPOS) as fuel price benchmark to prevent firms from unjustly adjusting their pump prices based on weekly changes in MOPS “even though their current inventories were bought at lower price levels.”
She said the law should clearly reflect the price monitoring system of the energy department shall be based on the unbundled retail price of petroleum products.
Quimbo also proposed that the President be empowered to suspend or decrease fuel excise tax rates when Dubai MOPS price reaches $80 dollars per barrel “to balance the interest of the people while maintaining a deregulated market.”
Vice presidential candidate and Senate President Vicente Sotto III said the schedule for the passage of a measure to review the oil deregulation law is “tight” since Congress has a few remaining days left when it resumes sessions on May 23.
Meanwhile, presidential candidate and Sen. Panfilo Lacson said the final approval of the measure may not be done immediately since it was just passed on the committee level.
“It will have to be discussed in the plenary before it is transmitted to us. I am not saying that it is already dead but it is premature to say it has been approved because it was only passed at the committee level. They must submit a committee report before it can be discussed on the floor,” Lacson said.
Congress went on adjournment for the campaign period staring February 5. It will resume sessions on May 23 for Congress to convene as the national board of canvassers.
Congress will go on a sine die adjournment on June 4, and will resume to open the 19th Congress on July 24 under a new administration. – With Raymond Africa
