The proposed suspension of excise tax collection from petroleum products may result in substantial revenue loss to the government amounting to P131.4 billion for 2022, a top Department of Finance official said Thursday.
Finance Undersecretary Antonette Tionko said made the estimate in a memorandum to Finance Secretary Carlos Dominguez III Thursday, following the earlier proposal of Energy Secretary Alfonso Cusi to suspend the imposition of excise taxes on fuel amid the weekly increases of petroleum prices.
Cusi referred to Republic Act 10963, or the Tax Reform for Acceleration and Inclusion Law provisions on the suspension of excise tax increases.
The provisions provide that in case the average Dubai crude oil price, based on the Mean of Platts Singapore, reaches or exceeds $80 per barrel for three months before the scheduled excise tax increase, the imposition of petroleum excise taxes can be stopped.
Cusi also said under RA 11469 or the Bayanihan to Heal as One Act, the President was granted emergency powers to undertake measures to mitigate the effects of the COVID-19 situation.
Tionko said by virtue of such provisions in Bayanihan 1, Section 1608 or RA 10863 or the Customs Modernization and Tariff Act was invoked to issue Executive Order 113, which temporarily modified the rates of import duty on crude petroleum oil and refined petroleum products.
Cusi said on Oct. 20, 2021, after realizing that the TRAIN Law or any executive issuances could not be invoked to suspend the imposition of excise taxes, any suspension could only be through new legislation amending the Oil Deregulation Law.
Cusi further said suspending the excise tax could lower pump prices by around P8 to P10 per liter.
“We confirm that the TRAIN law cannot be invoked to suspend excise taxes on petroleum,” Tionko said in the letter.
“We agree that the only possible way DOE may be granted powers to suspend is through legislative means. The power of taxation is vested in Congress and absent any law [such as in the case of Bayanihan 1], the DOE, the DOF or any other agency of the government has no power to suspend the imposition of excise taxes,” Tionko said.
“The suspension of the imposition of excise taxes on petroleum may result in substantial revenue loss amounting to P131.4 billion for 2022,” Tionko said.
Tionko recommended that any suspension of the imposition of excise taxes be appropriately studied as the revenue to be foregone would be substantial and “may affect the government’s budget for COVID-19 recovery measures.”
Under the TRAIN Law, the final tranche of the excise tax hike on fuel products took effect Jan. 1, 2020. Excise tax for gasoline and kerosene increased by P1 per liter while diesel prices went up by P1.50.
The last tranche brought the excise tax hike on most fuel products to a total of P10 per liter since TRAIN Law was passed in 2017.