PRESIDENT Duterte imposed an additional 10 percent duty on all imported crude and refined petroleum products to raise more funds for the ongoing government efforts to contain and address the coronavirus disease (COVID-19) pandemic in the country.
The President, on May 2, signed Executive Order No. 113, titled “Temporarily Modifying the Rates of Import Duty on Crude Petroleum Oil and Refined Petroleum Products Under Section 1611 of Republic Act No. 10863, Otherwise Known as the ‘Customs Modernization and Tariff Act,’” which temporarily raises the taxes on imported oil products.
The decision stemmed from the recommendations of the National Economic and Development Authority (NEDA), after its board approved on April 8 a resolution seeking a 10-percent temporary additional duty on imported crude oil and refined petroleum products.
The Independent Philippine Petroleum Companies Association (IPPCA) meanwhile said the move will further put the oil industry in the red and burden consumers.
The EO read Republic Act 11469 or the “Bayanihan to Heal as One Act” grants the President temporary emergency powers to undertake such reasonable and necessary measures to enable him to carry out the national policies of government.
The entire country had been under a state of calamity since March due to the new coronavirus disease 2019 (COVID-19). An enhanced community quarantine (ECQ) and a general community quarantine are in effect in select places until May 15.
“There is an urgent need to augment the government resources to sufficiently finance the programs and measures to mitigate the effects of the COVID-19 situation, and launch the country towards recovery and rehabilitation,” the EO said.
The EO said the Department of Budget and Management (DBM) shall study, proposed and take measures that are “appropriate and would ensure that the proceeds derived from the temporary additional import duty shall be used to fund measures that address and respond to effects of the COVID-19 situation, including social amelioration program and such other reforms of assistance for those affected.”
Under the issuance, the additional 10 percent duties would be added on top of the existing most-favored nation (MFN) and preferential import duties of: petroleum oils and oils obtained from bituminous crude; petroleum oils and oils obtained from bituminous minerals and preparations that contained 70 percent or more of bituminous minerals; light oils and preparations, and leaded motor spirit with research octane number (RON) of 97 and above or RON of 90 to 97; unleaded motor spirit with RON 97 and above, unblended, blended with ethanol of 90.
The 10-percent additional tax would also be imposed on naphtha, reformates and other preparations of a kind used for blending in motor spirits; alpha olefins; other petroleum spirits with a flashpoint of 23 degrees Celsius; lubricating oils an degreases; lubricating oil feedstock; lubricating oil for aircraft engines; diesel fuel and fuel oils; automotive diesel fuel; aviation turbine fuel jet with a 23 degree Celsius or up flashpoint; aviation turbine fuel jet with less than 23 degree Celsius flashpoint; and kerosene.
Also included are waste oils; petroleum gases and other gaseous hydrocarbons like liquefied natural gas, propane, buntane, ethylene, propylene, butylenes and butadiene; or in gaseous state like natural gas or those used as motor fuel.
The EO said the current import duties on other items not mentioned or listed shall remain.
It added the modified rates of import duties shall revert to zero in the event of international oil price increases based on the trigger price indexed; a certification from the Department of Energy (DOE) that a trigger price had been reached and the Department of Finance had been notified.
The Bureau of Customs shall come up with a corresponding memorandum order to implement the revisions on the import duties while the DOE in coordination with the DOF, the Department of Trade and Industry NEDA and BOC shall issue the needed implementing guidelines.
Meanwhile, IPPCA president Bong Suntay said while the duty will be temporary will be an additional cost to industry players which do not have a choice but to pass on to consumers.
As it is, Suntay said most industry players are currently selling at a loss.
“The petroleum industry is already burdened by the steep drop of crude oil price in the world market. Majority of our oil players purchased their supply when oil prices were still high. The implementation of the enhanced community quarantine in various parts of our country brought about a low demand for fuel which did not give the industry players a chance to dispose of their stock when oil price was still high,” Suntay said.
Energy Secretary Alfonso Cusi said the government needs to raise money to fight COVID-19. Imposing additional 10 percent (import duties) is temporary while the price of oil is low,” he expressed.
