Recto: Fuel excise tax freeze should be automatic

SENATE President Pro Tempore Ralph Recto said the tax-freeze provision of the tax reform law should automatically kick in when the price of Dubai crude oil reaches $80 per barrel.

He said Revenue Regulation 2-2018, the BIR regulation memorandum containing the implementing rules and regulations on the Tax Reform for Acceleration and Inclusion (Train) Act, is clear.

Section 5 of RR 2-2018 states that “for the period covering 2018 to 2020, the scheduled increase in the excise tax on fuel as imposed in this section shall be suspended when the average Dubai crude oil based on Mean of Platts Singapore (MOPS) for three months prior to the scheduled increase of the month reaches or exceeds $80 per barrel.”

“So it must be self-executory and automatically implemented. Kung gaano kabilis mangolekta ang Train (law), ganoon din dapat sa pagpreno kapag sobra nang bilis ang pagtaas ng presyo ng gasolina,” Recto added.

The BIR memorandum, however, also states that a "separate Revenue Regulation (memorandum) shall be issued for this purpose."

Recto said the "tripwire is $80 per barrel, based on Dubai crude as reflected in MOPS.”

“Ito ang (This is the) circuit breaker sa Train. When oil touches this price, suspended ang excise tax increase on gas,” he said.

Dubai crude posted a selling price of almost $75 per barrel 2 days ago.

"But what is compounding is the weakening of the peso against the dollar," Recto said, with the greenback fetching P52.557 on Friday, May 25.

"Weak peso and soaring prices of oil form a volatile mix when it comes to transport and cooking fuel prices,” Recto said.

Senators Grace Poe and Paolo Benigno Aquino IV also urged the immediate suspension of fuel excise tax to cushion the impact of rising prices.

Poe was reacting to the plan of the Light Rail Manila Corporation to increase fares because of the rising oil prices.

Aquino, for his part, said the excessive price increases, unprecedented inflation rate and government's "failure to deliver on the unconditional cash transfer program" are sufficient grounds to suspend the Train law.

Senator Risa Hontiveros, meanwhile, suggested that the value added tax (VAT) be lowered instead to 10 percent from the current 12 percent.

Senate President Vicente Sotto III said discussions on the impact of the Train law is best left to economic experts.

"We should leave this matter to the economic experts. Maaring may mga pagtaas but how about the benefits? Before we make conclusions or recommendations, we have to weigh things carefully." Sotto said in a press interview.

Sotto discounted the possibility of postponing the scheduled discussion about the second phase of the tax reform package. He said Congress should stick to the schedule. He also said Train 2 can used as ground to discuss and evaluate the effectivity of the existing Train law. (PS Jun Sarmiento/SunStar Philippines)

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