Economic sabotage

  • Written by Ryan Ponce Pacpaco
  • Published in Top Stories
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Featured Economic sabotage

HOUSE leaders yesterday warned  oil firms that they may face economic sabotage charges if they irregularly use the tax reform law to increase fuel prices as they called on the Department of Energy (DoE) to conduct spot audits on old stocks of oil.

“I call on the ERC (Energy Regulatory Commission) to make sure that this kind of front loading is not abused. While selling of gasoline bought earlier at a cheaper price is not per se illegal, if it is proven that such was done with malice and with pure profiteering intent, the company can be held liable for economic sabotage,” said Deputy Speaker and Marikina City Rep. Miro Quimbo.

Last December 19, President Rodrigo “Rody” Duterte signed into law package 1A of the Tax Reform for Acceleration and Inclusion Act (Train) under Republic Act (RA) No. 10963, which starting January 1, 2018 will slash and restructure personal income tax rates that stayed the same for two decades, while also jacking up or slapping new taxes on consumption of oil, cigarettes, sugary drinks and vehicles.

Eastern Samar Rep. Ben Evardone, who chairs the House committee on banks and financial intermediaries, said “the government should activate its task force composed” of DoE, Department of Justice (DoJ) and Philippine National Police (PNP) “to strictly monitor oil companies for possible violation of the existing laws.”

“The task force can conduct on the spot audits of oil companies to prevent them from charging excise tax to old stocks,” said Evardone.

Camarines Sur Rep. Luis Villafuerte, one of the vice-chairman of the House committee on appropriations, said “the government should put up right away an interagency committee to monitor price movements by oil companies and petroleum dealers—and prevent them from engaging in profiteering—following last January 1’s effectivity of the new excise tax rates under the TRAIN law.”

“This proposed interagency body must be empowered to audit these private firms to make sure they do not shrewdly use the TRAIN as a ruse to jack up prices,” said Villafuerte.
Deputy Speaker and Batangas Rep. Raneo Abu said “oil firms shall not apply the new excise tax on fuels on their old inventory of fuel products because this is an unjust enrichment on their part and they should not take advantage using TRAIN for their windfall profit.”
“The DoF with its revenue arm, the BIR (Bureau of Internal Revenue) shall monitor the market and shall ask the oil firms to submit all the records of their importations/production which were already subjected to excise tax. The BiR shall closely monitor their excise tax payments,” said Abu.
Quezon City Rep. Winston “Winnie” Castelo, who chairs the House committee on Metro Manila development,  appealed to oil companies not to raise the prices of their current inventory as a result of the new excise taxes on petroleum products.
“Only petroleum products that will arrive beginning January 1 will be subject to the new excise taxes,” Castelo pointed out. “Existing inventory as of December 31 is not covered by the new excise tax.”
Villafuerte also said that the “interagency group should run after profiteers because companies could not automatically raise their prices until their old oil stocks have been used up.”
“The excise tax is paid at the point of importation or refinery thus the traders couldn’t jack up prices last January 1 on their old stocks—to the detriment of Filipino consumers—using the new excise rates as an excuse,” said Villafuerte.
“Also, the monitoring and audit work of the proposed interagency group would serve as a dry run for the nationwide monitoring activity that the BIR and BoC would be doing once the TRAIN-mandated fuel marking and monitoring system is in place later this year as part of the government drive to check smuggling and tax evasion by unscrupulous oil firms and petroleum dealers,” said Villafuerte.
At present, there is no excise tax on diesel, kerosene, cooking gas and bunker fuel.
The tax on diesel and bunker fuel will start at P2.50 per liter in 2018, going up by P2 to P4.50 in 2019 and by P1.50 to P6 in 2020.
The levy on cooking gas will be P1 per kilogram next year, increasing by another P1 to P2 in 2019 and another P1 to P3 in 2020.
The tax on kerosene starts at P3, going up by P1 to P4 in 2019 and another P1 to P5 in 2020.
Existing impositions on other oil products like gasoline, asphalt, waxes and aviation fuel will likewise go up.
The tax on gasoline, for instance, will increase from P4.35 per liter to P7 in 2018, to P9 in 2019 and P10 in 2020.