2nd round of TRAIN to add P2.24/liter on fuel in 2019

Sen. Win Gatchalian is urging the Department of Trade and Industry (DTI) and the Department of Energy (DOE) to activate a task force that will guard against premature price increases and profiteering in the wake of the implementation of a new round of increases in the excise tax on fuel this January.

President Rodrigo Duterte has given his approval for the imposition of an additional levy worth P2.24 per liter on fuel products under Republic Act No. 10936 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

The lawmaker said DTI and DOE should work hand in hand in monitoring possible incidents of profiteering as a result of the implementation of the second tranche of fuel tax hike, in order not to further exacerbate the country's already high inflation rate.

"Ngayon na naaprubahan na ni Pangulong Duterte ang implementation ng second tranche ng fuel excise tax sa susunod na taon, kailangan ng DOE at ng DTI na maging mas mapagmatiyag upang masiguro na walang hoarding at profiteering na magaganap sa bansa," Gatchalian said.

He said the estimated rate impact on pump priced due to second round of excise tax hikes would be around P2 to P3 per liter, while the estimate rate impact of the second tranche of the excise tax on coal is around P0.048 per kWh for 100% coal contracted power distribution utilities.

Before they allow oil companies to impose fuel price hikes as result of the implementation of the second tranche of petroleum tax increase, Gatchalian urged DOE to scrutinize their inventories of petroleum crude oil and products.

He said there are unscrupulous oil retailers who will take advantage of the latest round of fuel tax hikes by increasing the price of fuel products that were imported prior to the implementation of the latest tax regime.

Citing DOE's Department Circular No. 2003-01-001 or the "Implementing Guidelines for the Minimum Inventory Requirements of Petroleum of Oil Companies and Bulk Suppliers," Gatchalian pointed out that oil companies must maintain a minimum inventory equivalent to 15-day supply of petroleum products.

However, Gatchalian noted that the DOE had difficulties in monitoring the end inventory of bulk suppliers and oil companies and withdrawals from the depots of oil stock a month before the TRAIN law took effect in January 2018.

"These are the times that we should be very vigilant. We don't want unscrupulous oil retailers taking advantage of the latest fuel tax hike by selling their old inventory products at a much higher price, even if they purchased it at a lower price," the lawmaker said.

As for the DTI, Gatchalian urged the Department of Trade and Industry (DTI) to closely monitor the prices of goods in the market as the second phase of the comprehensive tax reform measure takes effect next month, especially petroleum products.

He also hopes that the government's economic manager will not make the same mistake of failing into account the indirect effects of the fuel tax hike.

The lawmaker recalled that during one of the Senate committee hearings on inflation, the government economic managers underestimated the impact of the TRAIN Law.

As a result, the Bangko Sentral ng Pilipinas reported that the country's inflation rate accelerated to 6.8 percent in the third quarter of 2018. This brought the country's year-to-date inflation to 5.13 percent.

Gatchalian believes that working class Filipinos will continue to experience price hikes in the coming months as the government proceeds with the implementation of the next round of fuel excise tax.

"By now, I expect our economic managers to be more well-equipped and well-prepared in terms of taming the country's inflation for next year as the government proceeds with the implementation of the second tranche of the fuel excise tax hike," he added.

SOURCE: Gatchalian to DOE and DTI: Activate anti-profiteering task force ahead of 2nd fuel tax hike. Senate of the Philippines. Press Release on December 29, 2018. https://www.senate.gov.ph/press_release/2018/1229_gatchalian1.asp