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New House bill seeks higher tax on oil products
Judy T. Gulane with a report from Rommer M. Balaba, Business World (14 July 2004)

Quezon Rep. Danilo E. Suarez has filed a bill in the House of Representatives that proposes to increase the excise tax on petroleum products by PhP2 per liter.

Raising the excise tax on petroleum products is one of the 10 revenue-generating measures proposed by the Malacañan presidential palace's economic advisers, informally assembled into the Economic Managers Group, of which Mr. Suarez is a member.

In his bill's explanatory note, Mr. Suarez said the excise tax on petroleum products was last increased in 1996. Tax rates have not been raised since, and, thus, are now obsolete.

Mr. Suarez's bill proposes to increase by PhP2 per liter the tax on the following manufactured oils and fuels:

  • lubricating oils and greases -- from PhP4.50 to PhP6.50
  • processed gas -- from PhP0.05 to PhP2.05
  • waxes and petrolatum -- from PhP3.50 to PhP5.50
  • denatured alcohol -- from PhP0.05 to PhP2.05
  • naphtha, regular gasoline and similar products -- from PhP4.80 to PhP6.80
  • leaded premium gasoline -- from PhP5.35 to PhP7.35
  • unleaded premium gasoline -- from PhP4.35 to PhP6.35
  • aviation turbo jet fuel -- PhP3.67 to PhP5.67
  • kerosene -- from PhP0.60 to PhP2.60
  • diesel fuel oil and similar fuel oils -- from PhP1.63 to PhP3.63
  • asphalts -- from PhP0.56 to PhP2.56
  • bunker fuel oil and similar fuel oils -- from PhP0.30 to PhP2.30

Mr. Suarez's bill excluded liquefied petroleum gas, which is used by many households for cooking.

Albay Rep. Jose Clemente S. Salceda, who is also a member of the Economic Managers Group, said higher excise tax on petroleum products would yield a minimum of PhP9 billion and a maximum of PhP30 billion in additional annual revenues.

He earlier announced that Malacañang would issue an executive order to increase the import duty on petroleum products from 3% to 6%. He said this would yield only an additional PhP0.60 per liter.

Mr. Salceda said Mr. Suarez's bill would have to be adjusted to PhP1.40 instead of PhP2.00 per liter, for the total excise duty and tax to total to PhP2.00 per liter.

Mr. Suarez has already filed four tax bills at the House. The first three are:

  • on the grant of tax amnesty (with required submission of statement of assets, liabilities and net worth) to delinquent individual and corporate taxpayers;
  • providing for optimum performance of the Bureau of Internal Revenue, Bureau of Customs, Land Transportation Office and other revenue-generating agencies and bureaus through the grant of incentives and rewards, and lateral attrition if they do not meet their revenue targets; as well as
  • the imposition of a 7% computer education tax (separate from income and value added tax) on receipts from cellular phone calls.
    Meanwhile, a major fishers' group opposed the government plan to increase tariffs on crude and finished petroleum products, arguing that this would result in further revenue losses for them.

"Fuel alone now makes up about 50% of our cost of production, such that a good number of fishing fleets have either stopped operations or transferred elsewhere because of high fuel prices," said Vincent A. Minase, Jr. of the Alliance of Philippine Fishing Federation, Inc. at the sidelines of a public consultation on the issue.

The Tariff Commission yesterday held a multi-sectoral discussion on the Department of Energy's request for an increase in oil tariffs.

The request, if approved, would have converted the reduction in international prices of petroleum oil last month into government revenue instead of a price rollback.

The global price of Dubai crude, on which local petroleum companies base their retail prices, dropped by $1.21 per barrel last month on reports the Organization of Petroleum Exporting Countries had increased output by two million barrels per day.

"The planned increase [in tariff] is illegal since that eventually is equivalent to a deprivation [of income]," said Mr. Minase, whose group contributes about a third of the national fish catch.

Mr. Minase also claimed around 15% of existing fishing fleets nationwide have been grounded since operators could not cope with high prices of fuel. Some have even sold their vessels to recoup at least a portion of their investments.

"I know a few who have even shifted their operations to Indonesia, as fuel in that place costs 50% less than here," he added.

Tariff Comission chief Edgardo B. Abon said there was need to balance the proposed increase in tariff rates of petroleum products, the government's revenue aims, and the overall impact on the economy, particularly prices.

"I do not believe this is price neutral, we should strike a balance," Mr. Abon said, as he noted even petroleum companies present during the public hearing were ambivalent on the proposed tariff hike.

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Gulane, Judy T.
Business World

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