‘Filipinos are hurting’: Drilon sees no legal impediment to government suspending fuel excise tax
MANILA, Philippines — There are no legal impediments that would prevent the executive department from suspending the collection of fuel excise taxes to cushion the impact of rising oil prices, the chief executive said on Tuesday. the minority in the Senate, Franklin Drilon.
“We are not seeking a tax exemption here, and therefore a strict interpretation of the law is misplaced,” Drilon said in a statement, referring to the TRAIN (tax reform for acceleration and inclusion) law. .
“Filipinos are suffering. The burden should be borne by the government. The government cannot just hide behind the law and say nothing can be done. We cannot wait for the law to change to act. The situation is rapidly changing day by day and we need to act quickly,” he added.
Drilon, a former justice secretary, said there is no law preventing the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) from recommending the collection of excise taxes on fuel imports.
“There is nothing to prevent the executive, especially the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR), from suspending the collection of excise duties on petroleum products, if they really want to mitigate the impact of high oil prices on the cost of goods and living expenses of the ordinary Filipino,” he said.
“They enforce the law. Who will blame the DOF and BIR if they suspend excise taxes on petroleum products? Who will sue them? What rights will be violated if taxes are suspended? Please stop hiding behind the law. The TRAIN Act is not intended to tie the government’s hands and prevent it from reacting to shocking increases in oil prices to the detriment of consumers,” he added.
The senator said this as local pump prices for petroleum products are expected to rise further this week. He noted that gasoline prices are expected to increase by 3.50 to 3.70 pesos per litre, while diesel could increase by 5.30 to 5.50 pesos.
In the event that Dubai crude hits $120 a barrel, the Energy Ministry estimates gasoline prices could rise to 78.33 pesos per litre, while diesel could climb to 68.97 pesos per liter , Drilon said.
“The TRAIN Act provision should be interpreted liberally, not only in light of the suspension of excise duty increases, but also of its imposition. We are in an extraordinary situation. This is a situation that calls for liberal law enforcement and compassion,” Drilon said.
Drilon pointed out that the law recognizes that if the price of oil exceeds $80 a barrel, the government has the power to intervene to cushion its impact on the economy and consumers.
“The intent of the TRAIN Act is to give the DOF the power to stop possible inflation,” he said.
The TRAIN law, Drilon said, provides for the suspension of excise duty increases during the period 2018 to 2020 when the price of a barrel of oil exceeds $80. The last fuel excise tax increase was completed in 2020, but the price of oil has continued to rise since, he added.
“Obviously, the spirit of the law is to give the government leeway to deal with situations where the price of crude oil on the world market exceeds $80,” he said.
“The law recognizes that such a scenario will drive inflation to unconscionable levels – a scenario we want to prevent, mitigate and stop,” he added.
He added that under the TRAIN Act, the DOF “may also recommend the implementation or suspension of the fuel excise tax” based on an annual review.
He further pointed out that the DOF wants to suspend tax collection, it can and has done so in the past.
Drilon recalled that in 2021, BIR suspended the imposition of 12% Value Added Tax (VAT) on exporter purchases following objection from exporters, domestic suppliers and stakeholders, the BIR specifying however that the postponement is due to the covid19 pandemic.
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