By Chloe Mari A. Hufana, A reporter
PRESIDENT Ferdinand R. Marcos, Jr. on Monday he said he approved the suspension of the tax on liquefied petroleum gas. (LPG) and kerosene for lubrication the impact of rising fuel costs families, while leaving the tax for unmodified gasoline and diesel.
The special suspension is expected to provide a small relief to the domestic budget but may have a limited impact on transport costs and inflation, which are highly sensitive to diesel prices.
“We have lowered the tax on fuel products that are directly used in the daily lives of our countrymen under the authority given to us by law… which means lower cooking costs and daily needs for each family,” he told the forum in Filipino.
Mr. Marcos said the decrease is equal to P3.36 per kilo of LPG or about P37 per tank and P5.60 per liter of kerosene.
LPG prices are currently between P1,000 to P1,600 per tank, while kerosene prices are between P154 and P177.19 per liter.
Republic Act No. 12316, which went into effect on April 13, granted the President emergency powers to reduce or suspend excise duties on petroleum products.
Mr. Marcos said the Committee on the Unified Package for Livelihoods, Industry, Food, and Transport (UPLIFT) will meet on Tuesday morning to decide on the reduction or suspension of excise duty on gasoline and diesel.
“What we will do [on April 14] to make sure… [we have] supply of fuel, food products and all other raw materials [needed to] the continuation of economic activity,” said the President.
The country is under a year-long power emergency as the crisis in the Middle East threatens its fuel supply. Mr. Marcos established the UPLIFT Committee, an interagency organization responsible for managing the government’s response to the economic impact of the war.
Excise taxes amount to P6 per liter of diesel and P10 per liter of gasoline and other petroleum products, while a value-added tax of 12% is widely applied to goods and services.
SUPPLY OF FOOD
Meanwhile, Mr. Marcos said he ordered the Department of Agriculture (DA) and the Commission on Taxes to reduce duties on imported food to make it cheaper for Filipino consumers, but he did not specify specific amounts.
“We will protect consumers, farmers and industries. That is the balance we want because … the economy is a complex system,” he added.
The DA and local governments are expected to buy from local farmers.
“The government will hold this, so that the harvest is not wasted, our farmers do not lose money, and our consumers benefit,” he said, adding that the government will also expand the Benteng Bigas Program.
The government also took action to speed up the processing of permits, such as Sanitary and Phytosanitary Import Clearance. and Certificate of Need for Import, to reduce costs.
Mr. Marcos also ordered the removal of fees from fish ports.
The Philippine Ports Authority has also set the final “RoRo” (roll-on, roll-off) fee for vessels carrying agricultural products to P1.
“Our goal is to maintain adequate supply, prevent price increases, and ensure that our people continue to earn a living,” said Mr. Marcos.
John Paolo R. Rivera, a senior researcher at the Philippine Institute for Development Studies, said the impact of the suspension of excise duty on kerosene and LPG will be modest and targeted rather than broad-based.
Mr. Rivera said that this measure can bring immediate relief to households but the overall effect on the reduction of prices and total household expenses will be limited.
“Global price movements will still be ahead of local prices. Therefore, it helps margins especially for vulnerable households, but it is not enough by itself to significantly eliminate cost of living pressures,” he said on Viber.
TAX CREDIT SCHEME
Meanwhile, lawmakers are pushing for a tax credit program to allow for an immediate reduction in fuel prices, challenging the Department of Finance’s (DoF) view that the excise tax freeze may only apply to future sales of goods.
Marikina lawmaker Romero Federico “Miro” S. Quimbo, who heads the Ways and Means Committee, said the government should ensure that the public feels relief “immediately.”
He suggested in a session of the House of Representatives on Monday that fuel companies be given tax credits that are already paid on existing inventories to reduce the price at the pump without waiting for new shipments.
He estimated a reduction of about P10 per liter of gasoline, P6 for diesel and P4.50 for kerosene early in the morning. after the president’s order.
The proposal contradicts the DoF’s view that applying tax rebates to existing fuel in the country will be different.fcult.
“It will be difficult in terms of administrative possibilities, the removal of tax goods, the existing inventories here in the Philippines,” Finance Undersecretary Rolando T. Ligon, Jr. told the hearing. The direction they are looking at is for use in “future introductions.”
Mr. Ligon said applying tax exemptions to stored fuel poses technical and administrative challenges, citing the complexity of adjusting taxes on existing lists.
He said that once the order is signed, its operation may start within one to two days after it is issued by the Bureau of Customs.
Mr. Quimbo also asked the DoF to explain why the tax credit system will not work, noting that the Bureau of Customs maintains records of inventory and tax payments.
Talks on the fuel tax measures come as volatility continues in global oil markets amid conflicts linked to the Strait of Hormuz and the US-Israel war against Iran.
Energy Undersecretary Alessandro O. Sales said the price of diesel is expected to drop by P20 to P21 per liter on Tuesday due to market movements, but warned that conditions remain volatile.
He said prices could go up to P130 to P170 a liter if the conflicts start, while a long-term decision could lower diesel prices to P75 to P90 a liter in a few months.
VAT REMOVAL IS POSSIBLE
Meanwhile, Mr. Marcos has rejected calls to reduce or suspend the value-added tax (VAT) on fuel products, saying that revenue from VAT collection is needed to fund social welfare programs.
“If we take VAT from petrol products, it will only help the petrol market. What we need is funding to help the whole society,” he said.
“Currently, the analysis of the cost of VAT between the collection of VAT and the benefit of the people, the common people, is still in favor of us collecting VAT and spending more money.”
The DoF also expressed doubts about proposals to reduce VAT on fuel to 10% from 12%.
Mr. Ligon said the removal or reduction of VAT on fuel products will result in a loss of approximately P120 billion, further straining the national budget.
Joseph J. Capuno, undersecretary at the Department of Economy, Planning, and Development, said the Executive branch favors targeted subsidies over a uniform reduction in VAT.
“Targeted subsidies rather than similar tax cuts will affect our ability to raise money to support those subsidies,” said Mr. Capuno, noting that broad tax cuts benefit all segments of the population rather than just the vulnerable.
In response, Cagayan de Oro Rep. Rufus B. Rodriguez asked for a temporary reduction in VAT to 10% only until the market price of oil drops below $80 per barrel, calling the current situation a pressing emergency.
Mr. Rodriguez also forced a joint session of Congress to create a “Bayanihan 3” package to deal with the energy crisis, similar to the one that was initiated during the coronavirus crisis. – with Erika Mae P. Sinaking
