(File photo)
MANILA – Around PHP131.4 billion worth of government revenues are seen to be lost in 2022 if the proposed suspension of excise tax on petroleum products will be passed by lawmakers, the Department of Finance (DOF) said on Thursday.
Specifically, around PHP24.7 billion will not be collected by the Bureau of Customs (BOC) as baseline excise revenues while around PHP106.7 billion will not be collected from the incremental excise revenues under the Tax Reform for Acceleration and Inclusion (TRAIN) law or Republic Act 10963.
These figures were based on the projected total excise collection from petroleum products in the 2022 Budget of Expenditures and Sources of financing (BESF), Finance Undersecretary for Revenue Operations Group Antonette Tionko said in a memorandum to Finance Secretary Carlos Dominguez III dated October 20.
“Any suspension of the imposition of excise taxes should be appropriately studied as the revenue to be foregone is substantial and may affect the government’s budget for Covid-19 recovery measures,” she said.
Energy Secretary Alfonso Cusi earlier proposed the suspension of excise taxes on fuel products given the upticks in domestic oil prices, which is a result of developments in the international market.
He said the government can tap the provision of the TRAIN law for this purpose, particularly the suspension of excise tax if average Dubai crude oil prices based on Mean of Platts Singapore (MOPS) rose for three months prior to the scheduled excise tax hike implementation hits USD80 (around PHP4,000) per barrel or higher.
He also cited the need for emergency powers like what was given to the President under the Bayanihan to Heal as One Act to mitigate the upticks in fuel prices.
He, however, later said the government cannot use both measures and the only way to suspend the implementation of excise tax on fuel products is legislation.
Tionko confirmed that the government cannot tap the safety net provision under the TRAIN law because the covered period has lapsed.
Under the TRAIN law, the said provision can only be utilized between Jan. 1, 2018 until 2020.
“We agree that the only possible way DOE may be granted powers to suspend is through legislative means,” Tionko said.
She added that “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.”
As of Thursday, Brent crude futures is around USD85.28 (around PHP4,300) per barrel while US West Texas Intermediate (WTI) crude futures for December is around USD83.09 (around PHP4,200) per barrel. (PNA)
