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MANILA, Philippines — President Marcos is expected to certify as urgent any measure that will grant him the power to slash the excise tax on oil products to mitigate the impact of the ongoing Middle East conflict on commodity prices.
The government has enumerated measures to address the possible effects of the war involving the US, Israel and Iran, including targeted fuel subsidies to the transport and agriculture sectors as well as no-fare bus rides along major routes.
Marcos has also announced a plan to talk to lawmakers to seek authority to lower the excise tax on petroleum products should Dubai crude exceed $80 per barrel.
“Yes, because it is timely,” Presidential Communications Undersecretary Claire Castro said in a press briefing yesterday when asked if the President would certify as urgent any measure on fuel excise tax reduction.
If a bill is certified as urgent, it becomes exempted from the rule that it can only be passed on third and final reading three days after its approval on second reading.
On Tuesday, House committee on ways and means chairman Rep. Miro Quimbo filed House Bill 8257 granting the President the authority to suspend or reduce the excise tax on petroleum products during national or global economic emergencies.
Rep. Toby Tiangco of Navotas, for his part, authored Joint House Resolution 4 calling for a suspension of collection of VAT on fuel in view of the crisis in the Middle East.
Sen. Bam Aquino recently said the Tax Reform for Acceleration and Inclusion or TRAIN Law allows the automatic suspension of excise taxes on fuel products once oil prices in the world market breach $80 per barrel.
The suspension may be implemented if the average oil price in the global market reaches such amount in the next three months, according to the senator.
But according to Castro, the TRAIN Law provision is no longer in force because it only covers the period from 2018 to 2020.
“The President wants a new law so he can be given the authority to reduce the excise tax,” the Palace press officer added.
On Tuesday, Marcos made it clear the lowering of the excise tax on petroleum products would not be permanent. “It will be something that we will dispose of as soon as the crisis is over,” the President said.
The Middle East conflict erupted last Saturday after the US and Israel launched air strikes on Iran.
Amending NIRC
Quimbo’s proposed measure, meanwhile, seeks to amend Section 148 of the National Internal Revenue Code (NIRC) of 1997, which established a lawful and conditional mechanism for temporarily suspending fuel excise taxes under extraordinary circumstances.
“Congress must immediately pass a measure authorizing the President to suspend the excise tax on fuel during extraordinary circumstances, subject to clear and measurable triggers. Now is the time to prepare before prices surge further,” Quimbo of Marikina said.
“If there is a need to amend the law and give President Marcos enough powers to reduce the excise tax on fuel at this point, then Congress will do so. This is especially so if the price of crude oil in Dubai reaches $80 per barrel. Clearly, people will definitely bear the brunt of this,” Speaker Faustino Dy III said.
In introducing Joint House Resolution 4, Tiangco said the “continuing conflict (in the Middle East) is expected to cause significant increases in fuel prices, which will in turn also affect the price of basic commodities.”
For Reps. Antonio Tinio (ACT Teachers), Renee Co (Kabataan) and Sarah Jane Elago (Gabriela) of the Makabayan bloc, giving Marcos emergency powers is just a “band-aid solution on a gunshot wound.”
“This request for so-called flexibility is a smokescreen that keeps the people begging for temporary concessions from the President instead of enacting laws that decisively remove these burdens and dismantle the oil cartel,” they added.
At a briefing, Department of Agriculture spokesman Arnel de Mesa bared the allocation of P100 million fuel subsidy for farmers and fisherfolk, to be drawn from last year’s fuel subsidy funds.
Under the program, farmers are entitled to P5,000 fuel subsidy while fisherfolk can get P3,000 which would be released via the Interventions Monitoring Card.
The DA said 14,354 farmers and 14,947 fisherfolk are registered under the fuel subsidy program.
It also cautioned of possible price changes in the coming days due to higher fuel prices for transport. “It depends on how big the effect will be in transport because agriculture is part of the transport sector because of logistics with the movement of the agricultural goods,” De Mesa said.
DOE chief’s advice
With further oil price hikes seen, Energy Secretary Sharon Garin has advised the public not to share any reports on speculative fuel price estimates, citing high market volatility.
Two-day trading data from the Mean of Platts Singapore suggests that diesel and kerosene prices could rise by double digits due to the closure of the Strait of Hormuz, a narrow passage at the southern coast of Iran through which about one-fifth of the world’s seaborne oil flows.
Garin said any announcement of spikes in oil prices at this point is premature.
“Any adjustment every Tuesday needs five days of data from the previous week,” Garin told radio dzBB yesterday. “We will review five days of data from international markets over the weekend, then we will make an announcement,” she said.
“It’s true that oil prices are rising, but they may also decrease, or increase further – we don’t know,” the energy chief said. “I’d rather wait until this weekend to announce so the public doesn’t panic and hoard.”
Oil industry players are also wary of releasing figures at this stage. “There’s always this knee-jerk reaction, so we’ll wait and see throughout the week on how the movements continue,” Ariel Tiongco, president of Filoil Group, told One News.
“We’ve seen the market be very volatile over the past two days – we’re looking at MOPS as our reference for pricing. We’ve seen an increase of roughly $25 per barrel over the past two days for gas and oil, and around $15 per barrel for mogas,” he added.
Tiongco said Filoil’s stock levels go beyond the mandatory requirement, with import and secondary terminals “well-replenished.”
“We met with the oil companies and they assured us of ample supply and enough time to order some more if reserves run low,” Garin said.
Basilan Gov. Mujiv Hataman, for his part, has called on local government units across the country to accelerate their transition to renewable energy.
“In Basilan, we are proving that we do not have to be victims of global oil market shocks,” Hataman said. “When we power our hospitals and government centers with the sun, we secure the services our people depend on.” – Delon Porcalla, EJ Macababbad, Josiah Antonio, Roel Pareño
