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No need to suspend excise tax on fuel despite US-Iran tensions

no need to suspend excise tax on fuel despite us iran tensions 816x445 - No need to suspend excise tax on fuel despite US-Iran tensions

THE HOUSE Committee on Ways and Means “sees no need” to suspend the fuel excise taxes under the Tax Reform for Acceleration and Inclusion (TRAIN) Law despite the ongoing tensions between the United States and Iran, according to its chairman.

“The Committee on Ways and Means will continue to monitor oil prices, and currently sees no need to suspend fuel excise taxes under the TRAIN law, but would be best equipped to entertain proposals to suspend these taxes if other fiscal measures such as the taxes on Philippine Offshore Gaming Operations (POGOs) are passed to provide a fiscal breathing space for revenue-negative measures” Committee Chairman Jose Maria Clemente S. Salceda said in his aide memoire to the President, House Speaker, and House Majority Leader.

Mr. Salceda said that for the Committee to be able to entertain proposals to suspend or reduce fuel excise taxes, “the members should be convinced that such proposals will not adversely impact both the immediate and the long-term fiscal standing of the country”.

The committee chairman also said Congress should prioritize tax measures that do not directly impact Filipinos, such as the POGO tax regime, and improve the efficiency of revenue collection so that there is “adequate legroom” in case of adjustments in fuel excise taxes.

Mr. Salceda also noted that the timely passage of the 2020 budget and the extension of the 2019 budget will give the Philippine economy “some cover” amidst the ongoing global tensions.

“The situation’s impact on inflation and the economy can be overwhelmed by the government’s efforts as long as food supply is kept adequate, prices are closely monitored to prevent opportunistic behavior and key economic reforms such as CITIRA (Corporate Income Tax and Incentives Rationalization Act) and the rest of the tax reform are passed” Mr. Salceda said.

According to the committee chair, the “real threat” to the Philippine economy can come from the possibility of other Persian Gulf states, such as Oman, Qatar, Bahrain, UAE, and Kuwait, becoming directly involved in a military conflict.

“Remittances from the said small Persian Gulf countries represent $3.9 billion or 60% of total remittances from the Middle East… Involvement in a state of war by these countries would be a more alarming development for the country’s economy” Mr. Salceda said.

According to data from the Bangko Sentral ng Pilipinas, remittances from Iran and Iraq in 2018 represent 0.007% of inflows from the Middle East and 0.002% from abroad.

“Unless a state of elevated regional war emerges in the Middle East, the country’s economy should be able to absorb whatever loss in remittances could result from total repatriation of Filipinos in both Iran and Iraq” the official said.

Mr. Salceda said that although a full-scale regional war between the US and Iran “remains unlikely,” the House of Representatives should be prepared to accommodate a request for a standby fund for repatriating overseas Filipino workers in the Middle East.

He also recommended that the government should intensify its efforts in ensuring that the country maintains an adequate food supply.

“The government should also keep watch for potential opportunistic behavior among oil marketeers. It is proposed that the President request the Department of Energy and the Department of Trade and Industry to come up with concrete plans to ensure that the conflict is not taken advantage of as an excuse for undue pricing practices” Mr. Salceda said.

In view of the long term, Mr. Salceda recommended that the country should “seriously consider” the nuclear option and the exploration of new energy sources, especially in the West Philippine Sea. The Committee Chairman also said that the lower chamber is “prepared to champion” the President’s agenda for energy independence.

Moreover, Mr. Salceda also highlighted the need for the immediate passage of the Department of Overseas Filipino Workers.

“While voices were not discordant, the US-Iran conflict clearly distinctly magnified the need for an institution clearly invested with a primary mandate to manage such concerns, provide continuous policy advice to the President and the national leadership including Congress while leading the application of the whole-of-nation approach and other convergence strategies” Mr. Salceda said. — Genshen L. Espedido

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