Press Release
December 5, 2018


Akbayan Senator Risa Hontiveros today said that President Rodrigo Duterte's decision to proceed with the collection of the second round of excise tax on petroleum is "premature and impulsive." She said that the decision exposed the government's "wobbly policy" in protecting the public from the negative impact of unstable oil prices.

"President Duterte claimed that we are powerless to respond to the impact of the rise of oil prices in the world market. He also said that we are at the mercy of the international oil market. Then why lift the suspension on the fuel excise tax collection, one of the few safety nets that protect the public from the volatility of the international oil market?" Hontiveros asked.

"If the government failed to foresee the depth and gravity of the impact of volatile international oil prices on our inflation rate, what makes it think that the overall economic environment is turning around for the better? Isn't it more prudent to continue to allow the safety nets, such as the suspension of the fuel excise tax, to take full effect to shelter the people in an uncertain economic climate?" Hontiveros said.

Hontiveros said that there is solid basis to suspend the second round of excise tax on petroleum. She explained that value added tax (VAT) revenues on various petroleum products have risen and have exceeded projected revenues for 2018.

The Senator also argued that despite the series of oil price rollbacks, the peso cost of petroleum products has been and remains quite high as a result of the depreciated peso and the still high international price of petroleum products.

"During the October 24 hearing of the Senate Committee on Economic Affairs, the Department of Finance (DOF) admitted that the excess in VAT revenues is indeed substantial. Why then collect more indirect tax revenues via the petroleum industry? Bakit ipapataw pa ang fuel excise tax kung sapat naman o sobra pa nga ang VAT revenues?" Hontiveros said.

For 2019, Hontiveros estimated that excess VAT collection will probably be around P 10 billion given the lower expected oil prices. She also said that the windfall revenue from the VAT on transactions related to high-priced petroleum was never contemplated when the Tax Reform for Accelaration and Inclusion (TRAIN) law was passed.

"What our economic managers should do is defer the second round of excise tax on petroleum. The deferment will be for as many months as necessary to return and neutralize the unintended 2018 and 2019 VAT collections on petroleum-related transactions," Hontiveros said.

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