Congress approves bill reducing excise tax on fuels 

In light of successive fuel price increases, the House of Representatives has approved a substitute bill that aims to reduce or otherwise suspend excise taxes imposed on petroleum products. 

The public could soon get a reprieve from rising oil prices

Under the proposal, excise taxes on diesel, kerosene, and liquefied petroleum gas will be pegged at zero, effectively suspending the tariff. Meanwhile, excise taxes on low-octane gasoline will be lowered, while taxes on premium gasoline will be retained. If the measure is signed into law, the suspension will be in effect for six months. 

“It’s an immediate relief for Filipino families, especially affected sectors,” said Rep. Joey Salceda of Albay, who heads the Ways and Means Committee that approved the measure. “The bill will cost the government around Php 45 billion, but what the government loses, the consumer gains.” 

World oil prices have so far breached $80 per barrel

He notes that a self-correcting mechanism in the bill will revert excise tax rates to those prescribed by Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law once prices go back to normal. Under TRAIN, an excise tax of Php 10 per liter is currently levied on gasoline, while diesel is at Php 6 per liter and kerosene carries Php 5 per liter.
 
“If it goes back to $65 per barrel of crude oil, then the excise taxes will also normalize. The premise of this tax relief bill is that the situation is not normal,” Salceda explains. “If inflation weren’t so high, we would be discussing other matters. But now, consumers are hurting. Inflation is high. Incomes are depressed. So, immediate relief is obviously necessary.”   

As of November 8, 2021, West Texas Intermediate (WTI) crude oil has been priced at $81.93 per barrel. 

Apart from releasing financial assistance, the government has also approved an increase in passenger capacity for public transport

A provision in the bill creates a special fund for the purpose of providing cash assistance to affected sectors whenever oil prices increase. The Depertment of Transportation (DOTr) recently authorized the release of Php 1 billion in financial assistance to public transport drivers and operators. 

The bill is a priority measure of House Speaker Lord Allan Velasco, and is expected to be transmitted to the Senate by the third or fourth week of November. The Department of Finance (DoF) earlier objected to proposals to suspend excise taxes on fuel, warning that the reduced revenues will affect the government’s budget for COVID-19 recovery measures. 

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