Congressmen are pushing a tax credit scheme to allow immediate fuel price cuts, challenging the Department of Finance’s (DoF) position that suspending excise taxes may only apply to future imports.
Marikina Rep. Romero Federico “Miro” S. Quimbo, who heads the ways and means committee, said the government should ensure the public feels the relief “right away.”
He proposed at a House of Representatives hearing on Monday that fuel companies be granted tax credits for excise taxes already paid on existing inventories so they could cut pump prices without waiting for new shipments.
He estimated potential reductions of about P10 per liter for gasoline, P6 for diesel and P4.50 for kerosene as early as the day after a presidential directive.
The proposal runs counter to the DoF’s position that applying tax relief to fuel already in the country would be difficult.
“It will be hard with regard to administrative feasibility, the removal of the excise stocks, the inventories that are here in the Philippines,” Finance Undersecretary Rolando T. Ligon, Jr. told the hearing. The direction they are looking at is to apply it to “upcoming importations.”
Mr. Ligon said implementing tax relief on fuel already in storage poses technical and administrative challenges, citing the complexity of adjusting taxes on existing inventories.
He said once a directive is signed, implementation could take effect within one to two days through issuances from the Bureau of Customs.
President Ferdinand R. Marcos, Jr. has yet to decide whether to halt or cut fuel excise taxes under a law that empowers him to do so.
Mr. Quimbo also asked the DoF to explain why a tax credit scheme would be unworkable, noting that the Bureau of Customs maintains records of inventory and tax payments.
Discussions on fuel tax measures come as volatility persists in global oil markets amid tensions linked to the Strait of Hormuz and the US-Israel war on Iran.
Energy Undersecretary Alessandro O. Sales said diesel prices are expected to drop by P20 to P21 per liter on Tuesday due to market movements, but warned that conditions remain unstable.
He said prices could climb to P130 to P170 a liter if hostilities resume, while a longer-term resolution could bring diesel prices down to P75 to P90 a liter over several months. — Erika Mae P. Sinaking
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