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‘Defer oil tax hike or fuel price spiral’

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Senator Francis Escudero on Wednesday urged President Rodrigo Duterte to reconsider the implementation of the second tranche of the excise tax on fuel, or at least to consider its immediate suspension when inflation kicks up again in 2019.

READ: Oil price cuts precede tax hike

Senator Sonny Angara said the government should act swiftly in bringing down consumer prices and in releasing the unconditional cash transfer and fuel subsidy provided by law after Duterte approved the second tranche of the fuel excise taxes starting January next year.

“It is best to suspend the implementation of the second tranche of the fuel excise tax right away, or that the suspension be swift in 2019 so as to effectively address inflation before it again directly affects the lives of every Filipino,” Escudero says in Senate Resolution 964, which he filed on Wednesday.

Senate Minority Leader Franklin Drilon on Wednesday warned that least 1,200 companies were poised to leave the country while many investors were having uncertainties about investing in the country if the fiscal incentives were removed under the government’s proposed second package of tax reforms.

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“At least 1,200 enterprises might leave the country due to a sudden shift in policy, which would cut the incentives given to foreign investors,” Drilon said in Wednesday’s interpellation of the budget of the Department of Trade and Industry. 

He said the country also stood to lose about 150,000 jobs generated through the grant of incentives by the country’s top investment promoting agencies due to TRAIN 2.

“All of these will be in jeopardy once TRAIN 2 is passed,” Drilon said.

Escudero said postponing the next round of increase in the excise tax on fuel would unburden consumers, who were reeling from the high prices of goods due to the oil tax hike this year.

Under Section 43 of Republic Act 10963, or the Tax Reform for Acceleration and Inclusion or TRAIN law, the implementation or suspension of the excise tax on fuel depends on the recommendation of the Department of Finance and the Development Budget Coordination Committee to the President.

The President announced in October that he would temporarily suspend the second tranche of the fuel tax rate increase if the price per barrel would hit $84, a mitigating measure provided for under the train law.

However, on Dec. 4, on the recommendation of his financial and economic managers, the Palace announced that the government would proceed with the implementation of the second tranche of the fuel tax increase beginning January 2019. 

Angara said he hoped the prices of goods would go down and the assistance promised by the government under the law would be immediately given

He was referring to the unconditional cash transfer and Pantawid Pasada programs, which were provided as “social welfare benefits” under the tax reform law.

The law provides for additional unconditional cash transfers to low-income earners amounting to P2,400 for 2018 and P3,600 for 2019 and 2020, while the Pantawid Pasada entitles qualified franchise holders of public utility jeepneys to fuel vouchers.

The fuel subsidy program aims to ease the impact of the oil excise tax hikes on commuters and on the land transport sector.

However, Angara lamented the apparent delay in the implementation of the social mitigating measures under the tax reform law.

Akbayan Senator Risa Hontiveros said Duterte’s decision to proceed with the collection of the second round of excise tax on petroleum was “premature and impulsive.” 

She said the decision exposed the government’s “wobbly policy” in protecting the public from the negative impact of unstable oil prices. 

READ: Oil tax hike put on hold—Palace

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