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Solons warn oil firms vs exploiting Train law

Legislators who crafted the controversial Tax Reform for Acceleration and Inclusion (Train) law which embodied the first of five tranches of the tax reform plan of President Duterte warned oil firms against taking advantage of the law to generate unnecessary profit.

Marikina Rep Miro Quimbo said oil firms could be held liable for economic sabotage if found guilty of profiteering.
“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 Quimbo.
The Train or Republic Act 10963 that took effect last January 1 is expected to restructure personal income tax rates and increase taxes on oil, cigarettes, soft drinks and vehicles.
Quezon City Rep. Winston ‘Winnie’ Castelo appealed to oil companies not to raise the prices of their current “in country” inventory as a result of the new excise taxes on petroleum products. Castelo said the excise tax is imposed on petroleum imports and the current “in country” inventory — meaning that which is already inside the country — is not subject to the new excise tax.

“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,” he added.
Castelo said records from the Department of Energy show that on average oil companies maintain an in-country inventory equivalent to 15 to 24 days supply.
This means that the public should not expect any oil price increase arising from the excise tax within the next 15 to 24 days, Castelo said.
“That’s the estimated period before the supply that will enter the country starting January 1 will be on the market,” he explained.
Castelo expressed apprehen-sion some companies may take advantage of the new taxes to jack up prices and amass windfall profits.
“That would be very unfair to innocent consumers and unmindful to the plight of our many poor countrymen,” Castelo said.
He urged the Department of Energy to make public the “in country” inventory of oil companies as of December 31 to make sure no one takes advantage of the situation.
“So I really hope that the situation is not taken advantage or abused by businessmen who may be tempted by bigger margins,” he added.
Castelo made the appeal as the new tax on diesel, liquefied petroleum gas, kerosene and bunker fuel for electricity generation took effect on New Years Day.
Eastern Samar Rep. Ben Evardone, chair of 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 from 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 on old stocks,” said Evardone.
Camarines Sur Rep. Luis Villafuerte, vice-chairman of the House committee on appropriations, said “the government should put up an interagency committee to monitor price movements by oil companies and petroleum dealers—and prevent them from engaging in profiteering.”
“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.
No windfalls thru Train — Abu
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 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.
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 Jan. 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 starts 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 on the first year, another P1 on the second year in 2019 and another P1 on the thurd year or a total of P3 by 2020.
The tax on kerosene starts at P3 this year, P1 in 2019 and another P1 2020 or a total of P5.
Existing impositions on other oil products like gasoline, asphalt, waxes and aviation fuel will likewise go up.
The tax on gasoline will increase from P4.35 per liter to P7 in 2018, to P9 in 2019 and P10 in 2020.
ERC axing won’t affect public
Malacañang also assured the public that energy services will not be crippled following the suspension of four Energy Regulatory Commission (ERC) executives during the holidays.
Presidential spokesman Harry Roque, in a radio interview, said President Duterte is studying supposed measures to prevent the regulating body from being paralyzed.
The Office of the Ombudsman last month suspended Commissioners Gloria Victoria Yap-Taruc, Alfredo Non, Josefina Patricia Magpala-Asirit and Geronimo Sta. Ana for allegedly favoring the Manila Electric Company over certain deals.
Recently designated ERC chair Agnes Devanadera, who was solicitor general during the Arroyo administration, told Malacañang that close to P1.6 trillion worth of power supply agreements (PSA) could also go to waste because of the suspension order.
“The President recognizes that the absence of ERC commissioners amid the number of pending PSAs is really worrisome,” Roque said.
“And we agree with Chairman Devandera that if ERC would be paralyzed for a year, we will have to endure major brownouts,” he added.
Roque also said that Executive Salvador Medialdea and Chief Presidential Legal Counsel Salvador Panelo are studying certain measures to keep the ERC functioning.
Among the options that the Executive Secretary is looking into, according to Roque, is the possibility of reviewing or appealing against the Ombudsman’s decision and let the President fire them instead.
However, the law prescribes that ERC commissioners are serving a fixed term.
Panelo, on the other hand, recommended to the President that he could designate officers in charge or temporary commissioners to lead regulatory body in the mean time.
Roque stressed that what’s certain in this mess is that “the ERC should not be paralyzed.”
President Duterte on November 2016 urged ERC officials to step down from office as supposed corrupt practices reeked following the apparent hara-kiri of ERC bidding Director Francisco ‘Jun’ Villa who, in his suicide note, revealed that some contracts pass through a rigged selection process with blessings from dismissed ERC Chairman Jose Vicente Salazar.
Last August, Malacañang called the attention of the now suspended four ERC commissioners after being implied in receiving bribes and basking in foreign junkets.
The complaint on the ERC bosses came from United Filipino Consumers and Commuters (UFCC) president Rodolfo Javellana.
The letter from the Office of the President addressed to the ERC officials say that the complaint came with “attachments, charging you with serious dishonesty, gross neglect of duty, grave misconduct, [and] conduct prejudicial to the best interest of the service.” Ted Tuvera

1 comment

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    Fransisca Biller Sunday, 28 January 2018 19:35 Comment Link

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