In another move meant to bring down fuel prices, the Department of Energy (DOE) discussed in a recent Senate hearing that it is studying the possibility of suspending the 12% value added tax (VAT) on petroleum products.
The request comes on the back of previous efforts of DOE to lessen the impact of the increasing prices of oil to the market such as appealing to Congress to amend Republic Act (RA) 8479 or the Oil Deregulation Law and to suspend the excise tax imposed on fuel products.
The Senate hearing comes in after a continuous eight-week upward trend in oil prices leading to a seven-peso average increase in just under two months. Pump prices in Metro Manila have reached the mid-Php50 per liter level for diesel and the Php70/liter level for unleaded gasoline, on average.
If the pass-on of 12% VAT is stopped for the meantime, gasoline prices will be reduced further by Php7.80 per liter, while diesel could be lowered by an additional Php6.12.
Energy Sec. Alfonso Cusi said the energy department is seeking “a provision to allow us to do something, suspending the excise tax and VAT.” He added that the impact of such temporary scrapping of VAT and excise taxes levied on petroleum commodities is being re-evaluated “because the government needs to fund projects and services, so we are studying it.”
Sen. Imee Marcos recommended that the suspension of VAT on oil products could be limited to the public transport sector only.
Relative to this, Energy Asec. Gerardo Erguiza III said at a briefing on Friday that the DOE wanted the amendment of the Oil Deregulation Law certified as urgent.
“When we had discussions before this problem two to three weeks ago, the amendment of the Oil Deregulation Law is among three items [that are] very important to DOE. It was submitted to the [Presidential Legislative Liaison Office], which is coordinating with Congress,” he said.
Erguiza added the DOE is in talks with the Department of Finance on the possible implementation of Section 82 of RA 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law for the purpose of suspending excise taxes.