DOF backs excise tax relief on LPG, kerosene, but not diesel or gasoline

MANILA, Philippines — Finance Secretary Frederick Go has signed a resolution seeking the suspension of excise taxes on liquefied petroleum gas and kerosene, while holding off on similar relief for diesel and gasoline over concerns about who would benefit and the potential P12-billion monthly revenue loss.

Go announced the move during the Department of Finance's Senate budget hearing on Tuesday, September 22, after Sen. Bong Go asked what the government was doing to cushion consumers from rising oil prices.

"Actually kanina mga 15 minutes ago, pumipirma ako dito. Pinirmahan ko iyong resolution to remove excise taxes on LPG and kerosene, which is very similar to what we did in the first round of the Middle East War," the finance chief said.

(Actually, about 15 minutes ago, I was signing it here. I signed the resolution to remove excise taxes on LPG and kerosene, which is very similar to what we did in the first round of the Middle East War.)

The resolution still requires the approval of President Ferdinand Marcos Jr. before the tax suspension can take effect.

Under Republic Act 12316, the president may suspend or reduce excise taxes on specific petroleum products upon the recommendation of the Development Budget Coordination Committee and in coordination with the energy secretary once the average Dubai crude price reaches or exceeds $80 per barrel for a month.

The Department of Energy certified on September 15 that the benchmark had been breached, with Dubai crude averaging $99.41 per barrel from August 13 to September 11.

The law allows excise tax relief to last for up to three months.

Earlier Tuesday, Palace Press Officer Claire Castro said the government's recommendation on fuel excise tax relief was expected to reach Marcos within the week.

The move would effectively revive relief granted earlier this year, when Marcos suspended excise taxes on LPG and kerosene for three months beginning in April.

The economic team, however, is not recommending the suspension of excise taxes on diesel and gasoline for now.

"Ang conclusion po ng DBCC nung una namin itong pinag-usapan ay, number one, if you remove taxes on diesel and gasoline, it will not be progressive," Go said.

(The DBCC's conclusion when we first discussed this was, number one, that removing taxes on diesel and gasoline would not be progressive.)

Go said the DBCC's assessment was that higher-income consumers would receive a larger share of the benefit because they consume more gasoline and diesel.

"So we thought for that point is to keep the taxes and instead do a targeted subsidy to the vulnerable sectors," Go said.

The finance chief also said suspending excise taxes on gasoline and diesel would cost the government around P12 billion in revenue each month.

"In the absence of any revenue enhancing measure to replace the P12 billion a month that we will lose, in the meantime the DBCC is not endorsing that to the president," Go said.

The government has instead favored targeted assistance for sectors most affected by rising fuel costs, including fuel subsidies for public transport drivers.

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