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Excise tax, ethanol blend to hike fuel prices in 2019

The  Independent Philippine Petroleum Companies Association on Thursday warned that gasoline prices could go up by P7.65 a liter by 2019 because of the mandated monthly utilization of local ethanol in gasoline and the impending increase in excise taxes.

IPPCA warned that the increase in excise taxes and the mandate to acquire locally sourced ethanol would result in an increase of P7.65 per liter for gasoline by 2019.

“With the increase in excise taxes compounded by the increase in prices brought about by the requirement of exhausting locally-produced bioethanol, the general public bears the burden of the astronomical rise in gasoline price amounting to P7.65 by the year 2019 for gasoline,” it said.

The Biofuels Act, particularly Section 5, requires that all liquid fuels for motors and engines sold in the Philippines shall contain locally-sourced biofuels components.

IPPCA said gasoline prices went up by P2 a liter under the government’s  mandated monthly utilization of local ethanol in gasoline.

“In a study by IPPCA, it shows that under the current Biofuels Act of 2006 and guidelines and the LMA [local monthly allocation] imposed by the DOE [Department of Energy], there is a P2 impact on the price per liter of gasoline due to the combined effect of the price and local demand,” said IPPCA lawyers  Rodolf  Britanico and Maria Samantha David of Britanico of Sarmiento and Ringler law firm in a draft letter to Congress.

IPPCA, however, said that if there would be a reduced demand or a relaxation on the imposed LMA, which effectively keeps the bioethanol price constant, then there would be a significant P0.40 per liter reduction in the price of gasoline for every 10-percent point reduction in the LMA blend.

IPPCA, through their lawyers, plans to submit its report to Congress specifically on the tax reform advanced by House Bill 4774  (Tax Reform for Acceleration and Inclusion) in relation to the Energy Department’s guidelines on the utilization of locally-produced bioethanol under the Biofuels Act of 2006 or  Republic Act No. 9367.

Congress is currently tackling HB 4774, which seeks to “increase excise tax rates on all petroleum products to address negative externalities brought about by congestion and pollution.

IPPCA also proposes amendments in the Biofuels Act of 2006, in order to mitigate the significant increase in gasoline prices.

Topics: Independent Philippine Petroleum Companies Association , Excise tax , ethanol blend , gasoline prices , fuel prices , Biofuels Act
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