EO on excise tax cut out by mid-April

MANILA, Philippines — It’s going to be a long wait: President Marcos is likely to issue the order to suspend or reduce the fuel excise tax only in mid-April.

This was according to Department of Finance Undersecretary Karlo Adriano, who also told the Senate ad hoc committee on the Middle East crisis yesterday that the DOF’s technical working group with the Development Budget Coordination Committee (DBCC) is set to meet next week before the Holy Week break to decide on what to recommend to the President – a suspension or reduction of the fuel excise tax.

“So that before the April 13 deadline, the DBCC already has a recommendation for the President’s consideration and approval,” Adriano said.

At Malacañang, Presidential Communications Undersecretary Claire Castro said the law allowing Marcos to suspend or slash excise taxes on petroleum products takes effect 15 days after its publication in the Official Gazette or any newspaper of general circulation.

Castro explained that under the Civil Code, there is a grace period before a law is implemented in consideration of the right to due process of all stakeholders.

“If it is published, it (would) be considered as an information or a notice to the whole world. So, they can read it, understand it, assess it and prepare,” the Palace press officer said at a briefing.

And the 15-day grace period, only Congress can amend it so it is not in the hands of our President.”

Also at the hearing, Sen. Bam Aquino urged the executive to fast-track implementing the emergency powers.

“We, here in the Senate, prioritized this measure on our own and upon the certification of urgency of the President. We also hope that we will act with urgency,” Aquino said.

“If it can be legally done by April 12 or April 13 the soonest, then we expect it to happen by April 12 or 13,” he said.

No tax cut figure yet

The government is still determining the amount of reduction in fuel excise tax as it continues to consider other possible measures to alleviate the plight of sectors vulnerable to price hikes triggered by the Middle East war.

“We spoke with (Energy) Secretary Sharon Garin and it is under review for now because of the changing prices of petroleum products,” Castro said.

Under Republic Act 12316 signed last Wednesday, the President, upon recommendation of the DBCC and in coordination with the energy secretary, may suspend or reduce fuel excise taxes if Dubai crude oil price hits or exceeds $80 per barrel for a month.

Executives of oil companies informed the Senate committee about the difficulties they face in securing supply of petroleum products with the closure of the Strait of Hormuz.

Oil players also expressed their approval of a proposal in the Senate to remove the 12 percent value-added tax (VAT) on petroleum products.

Petron Corp. general manager Lubin Nepomuceno said China, Thailand and Singapore have imposed temporary export ban since the outbreak of the crisis to protect their supply.

“Securing crude and finished products continues to become more difficult… Replenishment of crude, which Petron primarily sources from the Middle East, has been halted as a result of the closure of the Strait of Hormuz,” he said.

Shell Pilipinas Corp. president and CEO Lorelie Quiambao Osial said that “if the conflict continues, then there will be tightness (of supply) in the entire world, which was first felt in Asia.”

“Today is March 26, which is the 26th day of the technical closure of the Strait of Hormuz, and that accounts for 20 percent, most of that is going through Asia… When it comes to supply, it is getting tighter and tighter,” she said.

Chevron Philippines president Pongtorn Tangmanuswong said their refineries are still running on crude oil supply acquired before the war, but it would only last for two months despite reduced production capacity.

Tanya Samillano, president of the Independent Philippine Petroleum Companies Association, said “it is easier for us to implement reduced prices when VAT is removed.”

Semillano said the industry favors removing VAT at the point of importation.

“Because what we want, what we were suggesting is we don’t remove it on the bottom, we remove it upon arrival of the cargo. Di na kami magbabayad ng VAT,” Samillano said.

“And then it answers your request for immediate implementation on the pump prices,” she added.

Shell’s Osial said “we are in favor. Actually, from a technical point of view, the VAT would be faster to implement, but indeed it should be end-to-end.”

“So at source until end. Also, the VAT is a percentage. Therefore, the higher the price, the higher the VAT becomes,” she added.

Sen. Sherwin Gatchalian, who chairs the Senate ad hoc crisis committee, said he was “depressed” over what he heard that supply of oil companies can only last up to the end of April or May.

“When I heard the statements of oil companies, I felt depressed. What I wanted to hear is certainty, if supplies will come in. It’s quite concerning. You cannot run a country or a business with uncertainty of fuel supply,” Gatchalian said.

He also urged the DOE to do its best to look for alternative petroleum sources and act faster in this time of crisis.

“My message to DOE – be always awake, because they’re all asking for your help. We need to double time here. If the oil companies are saying they’re suffering much, then it’s up to the government to move,” Gatchalian said.

Energy Undersecretary Felix William Fuentebella said the government is doing its part in monitoring profiteers and hoarders taking advantage of the crisis.

He said the agency will have its crisis meeting next Tuesday with the newly created Unified Package for Livelihoods, Industry, Food, and Transport or UPLIFT to discuss with DBCC operationalizing the emergency powers granted to the President.

Castro, meanwhile, maintained that the government’s temporary assistance measures have a huge impact on vulnerable sectors, as she assured the public that no one would be left behind in the giving of subsidies.

She said the social welfare and transportation departments would launch a special payout for jeepney drivers and transport workers who have yet to receive their P5,000 financial aid from the government.

Citing information from Social Welfare Secretary Rex Gatchalian and Transportation Secretary Giovanni Lopez, Castro said some drivers may have been excluded in the master list of the fuel subsidy program because of duplicate entries, incorrect data or failure to register with the Land Transportation and Franchising Regulatory Board.

The government is also looking into calls to provide minimum wage earners, the middle class and government personnel cash aid.

“It will be studied, it depends on the budget,” Castro said. — Arnell Ozaeta