Gatchalian willing to wait before deciding on fuel excise freeze

SENATOR Sherwin T. Gatchalian said on Tuesday that he wants to wait another quarter before recommending any suspension of fuel excise taxes under the tax reform law.
In an interview with reporters, Mr. Gatchalian, who chairs the Senate committee on economic affairs, said the Senate will “have to (resort to) some drastic measures” if the inflation rate breaches the 4.5% forecast of the Bangko Sentral ng Pilipinas (BSP) for the full year.
“I would rather be conservative and wait one more quarter. One more quarter will give you a strong indication whether it’s prudent to sustain the current excise tax in 2019,” he told reporters when asked if it was plausible to suspend fuel excise taxes to curb inflation.
“The BSP’s new target is around 4.5%, from 4.1%. They increased the upper limit of the target. For example, if it breaches 4.5% and accelerates, then we (may need) some drastic measures,” he added.
Republic Act 10963 or the Tax Reform Aceleration and Inclusion (TRAIN) law imposes excise taxes on gasoline and diesel of P7 per liter and P2.50 per liter, respectively. It contains a suspension provision for the scheduled increase of fuel excise taxes if the average Dubai crude oil price for three months prior to the scheduled increase reaches or exceeds $80 per barrel.
Mr. Gatchalian said the Senate may move to repeal the provisions on fuel excise taxes under the law if the inflation rate kept on rising.
“If inflation slows down, then that’ a good sign. If it accelerates then we will have to strongly recommend the suspension of excise tax (on fuel),” he said.
He also said he will continue to host briefings with economic managers regarding the inflationary effects of the TRAIN law and the status of its social mitigating measures as Congress resumes session in July.
Senators Grace S. Poe-Llamanzares, Joseph Victor G. Ejercito, and Paolo Benigno A. Aquino IV earlier called for the suspension of fuel excise taxes under the tax reform law due to the increasing prices of goods and services.
Mr. Aquino filed Senate Bill No. 1798 in May to introduce a mechanism that would suspend excise taxes on fuel when inflation breaches government’s quarterly targets. — Camille A. Aguinaldo