Lawmaker warns of LPG price surge with tax reform bill

By on May 20, 2017


A militant lawmaker at the House of Representatives on Friday warned of the adverse effect of higher levy fuel prices -- specifically for liquefied petroleum gas (LPG) -- due to the impending passage of the comprehensive tax reform package looms in the lower chamber. (PNA photo)
A militant lawmaker at the House of Representatives on Friday warned of the adverse effect of higher levy fuel prices — specifically for liquefied petroleum gas (LPG) — due to the impending passage of the comprehensive tax reform package looms in the lower chamber. (PNA photo)

MANILA—A militant lawmaker at the House of Representatives on Friday warned of the adverse effect of higher levy fuel prices — specifically for liquefied petroleum gas (LPG) — due to the impending passage of the comprehensive tax reform package looms in the lower chamber.

Bayan Muna Rep. Carlos Isagani Zarate said the tax reform bill pushed by the Department of Finance could have a profound impact on Filipino households, particularly the poor and the marginalized with LPG prices soaring at around PHP605 for an 11-kilogram cylinder in 2018.

Zarate noted that this price surge could also affect canteens, restaurants and other eateries.

“Sa ganitong pangyayari ay magiging pabigat sa mga nanay at siguradong magmamahal din ang mga pagkain sa mga karinderya at maging sa mga restaurant,” Zarate said.

House Bill 5636, also known as the Tax Reform for Acceleration and Inclusion (TRAIN), seeks to lower personal income tax (PIT) rates while raising excise taxes on certain commodities.

The measure imposes the following tax rates on liquefied petroleum gas, per liter: from PHP0.00 to PHP3 in 2018; PHP5 in 2019 and PHP6 in 2020. LPG has been exempted from excise tax since 2006.

With the new tax levied on LPG, the price is equivalent to an increase of PHP64.68 from the current 11-kg LPG price of PHP541 in 2018, Zarate noted.

“Each kilogram of an 11-kg cylinder for cooking has 1.96 liters of LPG. So, the current price of PHP541 for an 11-kg LPG will increase by PHP64.68 and would therefore be priced at PHP605.68 by 2018. For 2019, the price is pegged at PHP648.80 and PHP670.36 by 2020,” he added.

House ways and means committee vice chairman, Albay Rep. Joey Salceda, said that the increased in fuel tax actually targets the rich or top 1 percent of the population whose oil use is equal to the consumption of the lowest 50 percent of Filipinos.

Salceda explained that the effects of the increased fuel tax to the poorer sector of the population will be mitigated through a direct transfer program within a three-year implementation of the staggered increase of excise tax on petroleum products.

The bill has a revenue sharing feature wherein not more than 40 percent of the yearly incremental revenues generated from the proposed petroleum excise tax shall be allocated to fund social benefits programs and granting of fuel vouchers to qualified transport franchise holders.

Salceda said such feature “is one of the most progressive items, most egalitarian items, of the tax reform measure.”

House ways and means committee chair Rep. Dakila Cua, for his part, said they are contemplating on establishing a “social benefits card” which would entitle the holder to certain privileges, depending on his personal circumstances.

Majority Floor Leader Rodolfo Fariñas said HB 5636 will reach the House plenary on Monday and will most likely be approved on second reading by Wednesday next week.

Fariñas added the tax reform bill will be approved on third and final reading before the sine die adjournment on May 31 so that it can be transmitted to the Senate.

All tax measures must emanate from the House of Representatives.

HB 5636 aims to enhance the progressivity of the tax structure through rationalization of the internal revenue system.

Under the bill, workers earning no more than PHP250,000 annually will be exempted from paying personal income taxes.

To compensate for the revenue losses from the lowering of the PIT rates, some of the offsetting measures include increasing excise tax rates on all petroleum products and automobiles; expanding the value added tax (VAT) base by limiting exemptions to raw food and other necessities; introducing excise tax on sugar-sweetened beverages; and improving tax administration measures.

The revenues shall also be allocated for infrastructure, health, education and social protection expenditures.