THE Senate committee on economic affairs will consult with the government’s economic team in coming up with a mechanism that will help government quickly react to external price shocks.
Committee chair Senator Sherwin T. Gatchalian earlier said in a radio interview on Sunday that he wanted the Tax Reform for Acceleration and Inclusion (TRAIN) law to be amended in order to remove the suspension provision on fuel excise tax when the average Dubai crude oil price for three months prior to the scheduled increase reaches or exceeds $80 per barrel.
“The committee will review and consult the economic team as to what is the most appropriate mechanism to mitigate external price shocks,” he said in text message to BusinessWorld when asked about the possible replacement to the law’s $80 fuel price threshold.
The Senate committee on economic affairs has been conducting public hearings on the TRAIN law since February of last year to monitor the implementation of the law’s social mitigating measures and its inflationary pressure to the prices of goods.
“Based on our observations in 2018 when global oil prices suddenly surged, a sustained $80/bbl (per barrel) created adverse ripple effects in the prices of basic goods, such as food and transportation cost,” Mr. Gatchalian said.
He added that TRAIN law’s $80 fuel price suspension provision on fuel excise tax should be removed to allow the government to be “given the flexibility to react quickly in cases of sudden fluctuations oil prices.”
The law imposes an excise taxes on gasoline and diesel of P9 per liter and P4.50 per liter, respectively, starting in 2019.
Malacañang on December approved economic managers’ recommendations to go ahead with the increase in fuel excise tax in 2019 under the TRAIN law, reversing the Palace’s Nov. 8 order for its suspension. However, several lawmakers urged the President to reconsider his decision.
The House committee on ways and means began deliberating in December as well several bills and resolutions seeking to suspend the increase of excise tax on fuel.
Senator Juan Edgardo M. Angara, chair of the Senate committee on ways and means, has also said that the committee “will act immediately” on measures seeking the suspension of the fuel excise tax increase once the House of Representatives transmits the measure to the Senate. — Camille A. Aguinaldo