Senate eyes 6-month fuel tax hike suspension in 2019

MANILA, Philippines (UPDATED) – Senate committee on economic affairs chairperson Sherwin Gatchalian is proposing a 6-month suspension of the fuel tax hike stipulated in the Tax Reform for Acceleration and Inclusion (TRAIN) law in 2019.

In the Senate hearing on the issue held on Wednesday, October 24, Gatchalian said the longer period of suspension would enable both oil companies and consumers to adjust from the higher prices being experienced in 2018.

Aside from increasing fuel prices, other commodities have also become more expensive this year, hitting poor families the hardest.

The TRAIN law specifies that excise taxes on diesel and gasoline would be increased by P2 per liter effective January 1, 2019. Another P1.50 per liter would be added in 2020.

To protect consumers from spiraling prices, the law includes a provision stating that tax hikes may be suspended if Dubai crude oil prices average at $80 per barrel or higher for 3 straight months. But the law is silent on when tax hikes can be reimposed.

The Department of Finance (DOF) recently released an economic bulletin indicating that Dubai crude oil prices may taper off soon, but maintained that the 2019 fuel tax hike would be suspended.

Gatchalian initially told reporters after the hearing that the DOF – on its own – could implement the 6-month suspension he is proposing, without the need for Congress' approval. But in a statement on Wednesday evening, the senator corrected himself.

"After further review, I wish to clarify that the proposed fuel tax [hike] suspension requires congressional action," Gatchalian said.

"Section 43 of the TRAIN law on the automatic suspension of the fuel tax will not apply because the proposed suspension is not based on the breach of the $80 MOPS (Mean of Platts Singapore) threshold as provided in the law," he added.

Subsidy, cash transfers

As oil prices remain high, Gatchalian also said he will push to retain the P20,515 cash aid for jeepney drivers under the Pantawid Pasada program.

Economic managers previously said they would cut the cash transfer by half amid the looming fuel tax hike suspension.

Gatchalian also called on other implementing agencies like the Department of Transportation (DOTr) and the Department of Social Welfare and Development (DSWD) to speed up the distribution of unconditional cash transfers to the poor.

The DSWD reported that some 1.2 million individuals and households have yet to receive the P2,400 promised through the unconditional cash transfer program.

The DOTr was unable to provide figures to the panel, much to the disappointment of Gatchalian.

Instead, the senator pulled out the data himself from a DOTr report. He said that over 56,000 out of 179,000 drivers have been given cash cards for gas. – Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

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