Press Release
May 24, 2018

Recto: TRAIN has "self executory" gas tax freeze provision

The TRAIN Law has a tax-freeze provision which shall kick in when the benchmark price of crude oil reaches USD80 a barrel, Senate President Pro Tempore Ralph Recto said today.

Recto said RA 10963 explicitly provides for this "price triggered collection moratorium" which was reiterated in BIR Revenue Regulations No. 2-2018, the law's Implementing Rules and Regulations (IRR) on petroleum products pursuant to RA 10963.

"The tripwire is USD80 per barrel, based on Dubai crude as reflected in MOPS," Recto said.

"Ito ang circuit breaker sa TRAIN. When oil touches this price, suspended ang excise tax increase on gas," he explained.

But for this to take effect, officials of the DOF official said the agency must first issue a separate IRR.

But Recto said the language of the law is clear. "So it must be self-executory and automatically implemented."

Section 5 of RR 2-2018 states that "for the period covering 2018 to 2020, the scheduled increase in the excise tax on fuel as imposed in this section shall be suspended when the average Dubai crude oil based on Mean of Platts Singapore (MOPS) for three (3) months prior to the scheduled increase of the month reaches or exceeds eighty dollars (USD80) per barrel."

However, "a separate Revenue Regulation shall be issued for this purpose," the IRR states.

"Kung gaano kabilis mangolekta ang TRAIN, ganoon din dapat sa pagpreno kapag sobra nang bilis ang pagtaas ng presyo ng gasolina," Recto added.

Gasoline rated RON 91 has soared to an average P54.37 per liter this month from P32.72 in February 2016.

Meanwhile, Dubai crude posted a selling price of almost $75 per barrel 2 days ago.

"But what is compounding is the weakening of the peso against the dollar," Recto said, with the greenback fetching P52.41 on Tuesday, a 13% increase from $1 to P46.28 exchange rate 25 months ago.

Weak peso and soaring prices of oil form a volatile mix when it comes to transport and cooking fuel prices," Recto said.

"Kaya hindi lang oil price, tingnan rin pati ang strength of the peso, kasi kahit $50 lang ang presyo ng langis kung sisirit naman, halimbawa, ng P80 ang palitan ng piso sa dolyar, lolobo rin ang halaga ng gasolina," Recto said.

"Walang 'unli' na basis ang presyo ng langis. May ceiling dapat. Pag umabot ng $80, stop. The reason being is that government should not profit from high oil prices," Recto said.

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