Energy, Finance departments disagree on excise tax suspension


Posted at Oct 28 2021 08:43 PM

The energy department is asking Congress to give it powers to suspend collecting excise taxes on petroleum products but the finance department does not agree with it.

During a briefing by the House committee on energy on Thursday, Department of Energy (DOE) Assistant Sec. Gerardo Erguiza Jr. said Congress should allow the department to intervene when pump prices skyrocket.

”We have referred this matter to Congress basically because we want the DOE to be given the framework of authority to intervene in situations when there is spike in oil prices,” Erguiza said.

Under Republic Act 10963, or the Comprehensive Tax Reform Program (TRAIN) law, if the price of petroleum products goes beyond 80 dollars per barrel for 3 months, the excise tax on fuel could be suspended.

However, the energy department said the provision in the TRAIN law on suspending excise tax on oil can no longer be used because it has already lapsed.

”The period of suspension under that section has already lapsed and any plan for suspension shall now require the passage of another law,” DOE Oil Management Bureau Dir. Rino Abad explained.

Basing on the common pump prices, the energy department said if the excise tax will be relaxed now, at least P6 per liter or 12% of the current price on diesel could be slashed.

The energy department is also asking Congress to amend the current oil deregulation law, including unbundling oil prices.

Erguiza said Energy Sec. Alfonso Cusi has issued a department circular on the unbundling but it was stopped by a court temporary restraining order.

The Department of Finance, however, does not support the DOE’s proposal, as it warned of the effects on relaxing the excise tax.

“The DOF does not support the proposed suspension of the excise taxes as well as the VAT on fuel because it translates to significant foregone revenues,” said DOF Dir. Euvimil Nina Asuncion.

The finance department sees the proposal is detrimental to the country’s recovery and growth. 

"Suspending all the fuel excise taxes and the VAT on fuel excise will result in revenue losses of P147.1 billion or around 0.7% of GDP in 2022,” said Asuncion.

Lawmakers are asking more data from the government on the issue.

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