THE HOUSE COMMITTEE on ways and means will study the option of giving President Rodrigo R. Duterte the power to suspend tax increases under the Tax Reform for Acceleration and Inclusion (TRAIN) law amid concerns over elevated prices of consumer goods, the head of the panel said in a television interview on Monday.
Despite Republic Act No. 10963 already having a provision to suspend succeeding petroleum excise tax hikes triggered when global oil prices reach a certain threshold, House ways and means committee chairman Dakila Carlo E. Cua (Quirino) said that Congress may introduce more safeguards.
Pag kulang pa ‘yan (If the safeguard under the law does not suffice), we can also legislate further enhancements. Bigyan natin yung Presidente ng kapangyarihan (We could give the President the authority) to suspend other features. Kung kailangan natin ‘yan (If we need more safeguards), why not?” Mr. Cua said yesterday in an interview with Cignal TV’s One News.
“That’s the option we’re thinking of,” he added, noting that the possibility had been discussed when TRAIN was still a bill.
“I’m open to pushing for that authorization so it can be studied and targeted.”
Offhand, he said, suspending hikes in fuel excise tax provided under the law will benefit the rich more than the poor, since the top 13 million richest households account for 50% of the petroleum consumption.
“But for me, the most important is the rollout of social benefits,” he added.
Mr. Cua said that such measure is possible, as he recalled that the administration of former president Gloria M. Macapagal-Arroyo moved to delay the coverage of fuel in the extended value-added tax program.
The concerns came as inflation clocked 4.5% in April — the fastest clip in more than five years — bringing the four-month average to 4.1%, which is above the Bangko Sentral ng Pilipinas’ 2-4% target for full-year 2018.
That prompted the central bank last May 10 to raise benchmark interest rates for the first time in nearly four years by 25 basis points in response to elevated inflationary pressures, even as monetary authorities said price pressures should moderate in 2019.
The Department of Finance (DoF) in a separate statement yesterday has defended the TRAIN law, saying it only contributed only 0.4 of a percentage point to April’s inflation reading, and of that amount, increases in petroleum taxes only accounted for 0.2 of a percentage point.
Finance Undersecretary Karl Kendrick T. Chua has said that high world oil prices, triggered by unexpected geopolitical and global economic developments, have been responsible for the pump price hikes, together with the peso’s sharp depreciation.
Mr. Chua said that “the DoF does not have any plans of immediately suspending the increased rates of excise taxes on petroleum products for 2018 as this is not the mechanism sanctioned by law.”
The law reads that the “scheduled increase in the excise tax on fuel… shall be suspended when the average Dubai crude oil price based on Mean of Platts Singapore for three months prior to the scheduled increase of the month reaches or exceeds $80 per barrel.”
Reuters has reported that the Organization of the Petroleum Exporting Countries, as well as top producer but non-OPEC member Russia, started withholding supplies in 2017 to tighten the market and prop up prices, which in 2016 fell to their lowest in more than a decade at less than $30 per barrel. Prices have soared since the start of the cuts last year, with Brent breaking through $80 per barrel earlier this month. But prices have been on the downtrend lately in the face of unabated US production gains and statements by Saudi Arabia and Russia that they may increase supplies.
Moreover, Mr. Chua said that the Finance department “is working closely with the lead implementing agencies of projects related to TRAIN to ensure that the mitigating measures will be delivered to the people at the soonest possible time while ensuring the least leakage.”
This year, the poorest 50% of Filipino households will receive P200 a month in state subsidies, which will increase to P300 a month in 2019 and 2020. The DoF said that the Department of Social Welfare and Development has so far released some P4.3 billion to the Land Bank of the Philippines for some 1.8 million beneficiaries of the Pantawid Pamilyang Pilipino Program, with cash transfers conditional on recipients ensuring their children go to school and avail of preventive healthcare. Another 2.6 million household beneficiaries are in the process of getting their cash subsidies in May and June. — Elijah Joseph C. Tubayan