House approves bill allowing Marcos to suspend or cut excise tax on fuel

The House of Representatives on Monday passed on final reading a bill authorizing President Ferdinand R. Marcos, Jr. to suspend or cut excise tax collections on fuel products, a move that promises to give some relief to motorists reeling from surging pump prices.

During plenary session, 247 lawmakers voted in favor of House Bill No. 8418, which seeks to give the President the power to temporarily halt or reduce the excise tax rates on fuel during national and global emergencies for no more than six months.

Three were against the bill, which Mr. Marcos certified as urgent to hasten its passage through Congress.

“This measure is a direct response to the ongoing crisis in the Middle East, which has a direct impact on fuel prices and the cost of basic goods in the Philippines,” Majority Floor Leader and Ilocos Norte Rep. Ferdinand Alexander “Sandro” A. Marcos III said in a statement.

“We need to enact this into law to provide immediate relief to our people.”

The bill’s approval comes as the Iran war stretched into its third week with no end in sight, with Washington and Tehran showing no desire to strike a deal to end the conflict.

The Philippines imposes an excise tax of PHP 10 per liter on gasoline, PHP 6 per liter on diesel and PHP 5 per liter on kerosene under the 2017 Tax Reform for Acceleration and Inclusion law. It previously allowed the government to suspend the collection of excise tax on fuel when world oil prices reach USD 80 per barrel for three straight months, but that provision lapsed six years ago.

Under the bill, the President may now suspend or cut the collection of excise taxes on fuel if the average Dubai crude oil based on Mean of Platts Singapore benchmark reaches or exceeds USD 80 per barrel for a month.

But the Development Budget Coordination Committee must give a recommendation before the President can cut or suspend excise taxes on fuel, a key revenue stream for the government.

Any order suspending or reducing excise taxes due to emergencies or calamities must be certified by the Energy secretary, confirming that pump prices have surged “extraordinarily” as a result of the calamity, the bill said.

“The suspension may be applied to specific petroleum products and may be implemented either as a full suspension or partial reduction,” it said.

Under the bill, any suspension or cut in the fuel excise tax rate could be extended beyond six months through a joint congressional resolution, but cannot last longer than a year.

The bill also requires the President to submit to Congress within 15 days of issuing such an order a “factual basis” for halting or cutting the excise tax of petrol, including estimates of foregone revenue and the impact on inflation, fuel prices and economic activity, with monthly reports to follow.

Under the bill, the President may only suspend or reduce excise tax collections on fuel products until Dec. 31, 2028.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said giving the President the power to suspend or cut the excise tax on fuel is not advisable.

“Cutting the excise tax means less revenue,” he said in a Viber message, recommending the government opt for a targeted subsidy program for the transport and food sectors instead to rein in surging prices. “A portion of excise tax collections helps pay for targeted aid.”

Department of Economy, Planning, and Development Secretary Arsenio M. Balisacan earlier said revenue losses from the suspension of excise taxes on petrol could reach PHP 43.3 billion if the suspension lasts three months, and PHP 106 billion if extended until September.

Biofuels bill

Meanwhile, the House also approved on second reading House Bill No. 8469, which seeks to temporarily suspend the mandatory blending of biofuel on gasoline and diesel to help ease soaring pump prices.

A measure certified as urgent by Mr. Marcos, the bill allows the president to suspend the use of locally sourced biofuels for up to a year if blended gasoline and diesel are at least 5% more expensive than pure fuels.

“The mandatory blending of locally sourced biofuels can lead to a situation where blended fuel becomes more expensive than pure gasoline or diesel, exacerbating the financial burden of the vulnerable,” Palawan Rep. Jose C. Alvarez, who sponsored the bill, told the House floor.

The 2006 biofuels law required all fuels for use in motor engines to be blended with plant-based renewable fuels, and since 2012 gasoline have been sold with a 10% bioethanol mix.

“The Biofuels Act was enacted to reduce the country’s reliance on imported fossil fuels, to support our local agriculture sector and to promote cleaner and more sustainable energy sources,” Mr. Alvarez said.

Noel M. Baga, co‑convener of the Center for Energy Research and Policy, said the government could adopt several measures to lower fuel costs, including declaring a state of calamity to allow the imposition of price ceilings.

“The government can address the ongoing oil crisis through both immediate and long-term measures,” he said in a Facebook Messenger chat. — Kenneth Christiane L. Basilio, Reporter