By Chloe Mari A. Hufana, Reporter
PRESIDENT Ferdinand R. Marcos, Jr. on Tuesday said he might seek “special powers” to temporarily lower the excise tax on petroleum products, because the Middle East war threatens to trim the Philippines’ economic growth this yr.
At a news briefing, the President framed the possible tax relief as a direct measure to ease the burden on Filipino consumers, who’re already feeling the impact of upper fuel costs.
“We’re discussing [with lawmakers], and it may very well be helpful to offer the President the authority to cut back the excise tax on petroleum products should Dubai crude exceed $80,” Mr. Marcos said. “We’re not yet there. But when that happens, then possibly that is one tool that we are going to have.”
Mr. Marcos said he’ll discuss the proposed lower excise tax with Congress leaders, adding that it would only be a short lived measure.
“It shouldn’t be going to be a everlasting measure. It should be something that we are going to get rid of as soon because the crisis is over,” he said.
Finance Secretary Frederick D. Go said the economic team will work with Congress to offer the President the authority to temporarily cut excise taxes on fuel if Dubai crude oil breaches the $80-per-barrel level.
“To be clear, this doesn’t mean the authority can be routinely exercised. It’s a precautionary measure — a ready policy tool that the President may use, if mandatory, to act swiftly in protecting Filipino consumers and safeguarding the broader economy,” Mr. Go said in a press release.
Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, excise taxes on all oil and fuel products were increased in three tranches from Jan. 1, 2018 to Jan. 1, 2020.
The TRAIN law also routinely suspends the excise tax on petroleum products if the common price of oil in the worldwide market reaches $80 per barrel in the following three months.
The Philippines imports its oil mostly from the Middle East, making it vulnerable from geopolitical tensions that might impact domestic prices upward should they persist.
GROWTH AT RISK?
At the identical time, Mr. Go told reporters the conflict could shave off as much as 0.25 percentage point (ppt) from the country’s economic output this yr, highlighting the broader fallout of rising oil prices and global uncertainty.
Mr. Go said they’re closely monitoring movements in global oil prices and the duration of the conflict and the potential of sustained higher oil prices.
US President Donald J. Trump earlier said the war could last 4 to 5 weeks but may extend far longer.
“In a single scenario that was checked out, I believe there’s an impact on GDP (gross domestic product) of between 0.1 [ppt] and 0.25 [ppt],” he said.
Based on Mr. Go, there isn’t any must revise this yr’s 5-6% GDP growth goal for now, noting global oil prices are currently around $76 to $78 per barrel.
Growth targets may very well be revised if oil prices rise to around $85 per barrel, he added.
SUSPENSION OF EXCISE TAX
Meanwhile, legislators are backing calls to suspend the gathering of excise tax on fuel products.
“Now could be the time to arrange before prices surge further,” Marikina Rep. Romero “Miro” S. Quimbo, who heads the Committee on House Ways and Means, said in a press release. “Congress must immediately pass a measure authorizing the President to suspend excise tax on fuel during extraordinary circumstances.”
Mr. Quimbo filed House Bill No. 8257 which seeks to grant the President authority to suspend or reduce excise taxes on petroleum products during national or global emergencies. Nonetheless, it proposed that any suspension or cut within the fuel excise tax rate needs to be effective for a maximum of six months, unless prolonged by lawmakers through a joint congressional resolution.
The bill requires the President to undergo Congress inside 15 days of issuing a suspension order a “factual basis” for halting or cutting excise taxes, including estimates of foregone revenue and the impact on inflation, fuel prices and economic activity.
Navotas Rep. Tobias Reynald M. Tiangco filed a joint congressional resolution that might allow Mr. Marcos to temporarily halt the gathering of value-added tax (VAT) on fuel products.
On the Senate, Senator Emmanuel Joel J. Villanueva filed Senate Bill No. 1922 that seeks to supply the President with powers to suspend or reduce excise tax on gasoline and diesel once the common price of crude oil exceeds $80 per barrel.
Under the bill, the President can suspend or reduce the excise tax on fuel through an executive order, upon the advice of the Energy and Finance secretaries.
The bill also provides for the automated lifting of the suspension once global oil prices stabilize.
Senator Paolo Benigno “Bam” Aquino IV also filed Senate Bill No. 1923, which proposes to suspend the excise tax imposed in cases of national emergencies or when public interest requires it.
Senate Finance Committee Chair Sherwin T. Gatchalian expressed concern that the suspension of excise tax collection on petroleum products could hurt revenue collection, and impact economic growth.
He estimated the federal government may forego around P30 billion a month in revenues or around P300 billion in annual revenues attributable to the measure.
“If the choice is to remove excise tax, there can be numerous losses. My worry is that we’re coming from a slow growth. Possibly we won’t reach the goal growth,” Mr. Gatchalian told reporters.
SECURE OIL SUPPLY
Meanwhile, Mr. Marcos said the Philippines has ample energy supply but urged the general public to reduce energy use.
Mr. Go said the country’s oil supply is secure, because it has the pliability to source from other oil-producing states.
“The Philippines maintains an adequate oil buffer corresponding to roughly 50 to 60 days of national demand, providing a cushion against short-term price volatility,” he said.
The President said he can even direct government agencies to reduce their energy use.
“We have now given instruction to all government offices to search out ways to avoid wasting on energy. That applies — that is my call to the people as well — let’s discover a strategy to reduce our use of all our sources of energy,” Mr. Marcos said.
Also, Mr. Marcos urged for restraint from all parties but noted the Philippines is simply “tangentially” involved attributable to the variety of Filipinos within the region.
“Let’s hope that there’s a ceasefire, and we, the Philippines, ask all parties to point out restraint and to bring this to an in depth as quickly as possible,” he said.
The Middle East is home to over 2.4 million migrant Filipino employees, who send a gradual stream of remittances that’s a crucial component of the Philippine economy. — with Kenneth Christiane L. Basilio and Adrian H. Halili