Senate discussions on TRAIN’s fuel marking, petroleum and automobile excise taxes continue

With the House version approved on third and final reading last May 31, 2017, the pressure for the Senate to submit its final version of the Tax Reform Acceleration and Inclusion has doubled.

The Senate Committee on Ways and Means, chaired by Senator Juan Edgardo “Sonny” Angara, has started conducting committee hearings focused on the first package of the Tax Acceleration and Inclusion (TRAIN), more specifically on the proposed fuel marking, petroleum and automobile excise taxes in House Bill 5636 and Senate Bill 1408.

Several provisions were added to House Bill 5636, including a fifth tier on the excise tax of automobiles which is to be levied effective January 1, 2018; a two-year implementation period; an exemption for hybrid and electric powered vehicles; as well as a provision earmarking 40% of the incremental revenue from petroleum excise tax for social programs.

Undersecretary Karl Kendrick Chua of the Department of Finance (DOF), the key agency in charge of crafting tax reform, has repeatedly underscored that the package was designed to be progressive, equitable, pro-environment, and pro-health. Instead of tax exemptions to protect the poor which in reality subsidizes the rich, the DOF proposes five programs to help the poor cope with the tax adjustments.

The five programs include a targeted cash transfer program. For one year, a P200 per month will be given to the 50% poorest households* (who are presently not income tax payers) identified in the “Listahanan.” The object of which is to mitigate the moderate increase of prices of goods. The other programs are subsidies for Pantawid Pasada, cross subsidies in Small Power Utilities Group (SPUG) areas through Pantawid Kuryente, providing social welfare cards to the poor and the vulnerable and the Public Transportation Modernization.

Furthermore, he maintained that obsolete provisions like the 0% excise tax on diesel and other oil products promotes wastage and inefficient use, harms the environment and health, and can affect long term development. These issues are to be addressed in the current tax package.

Stakeholders from the automobile and petroleum industry, labor groups, as well as key agencies including the Department of Social Welfare and Development (DSWD), Bureau of Customs (BOC), and Department of Energy (DOE) have expressed their comments and suggestions regarding the bills. 

While generally supportive of the measure, labor and transport groups have expressed their qualms on the expected increase in oil prices which will affect their operations and will compel them to increase transport fares. This was refuted by Usec. Chua, claiming that the broadened tax base resulting to bigger take home pay is enough to offset the minimal increase. 

Undersecretary Emmanuel A. Leyco of DSWD protested against the proposed 200 pesos a month subsidy to the targeted poorest households identified in the Listahanan and claimed it to be insufficient especially for the poor situated in isolated and depressed areas.

The Bureau of Customs, represented by Director James Layug, highlighted the importance of fuel marking to put an end to smuggling, adulteration, and dilution of fuels. The country, according to Director Layug, is losing around P26 billion annually in oil smuggling alone.

The first tax reform package was introduced as early as September of 2016. Packages 2-5 are expected to be presented on the last quarter of 2017 to early 2018.


The Senate is expected to expedite the passage of the first tax reform package which will be one of the main source of funding for the administration’s “Build, Build, Build” projects. The measure was labelled as “urgent” by President Duterte’s in his recent State of the Nation Address.


*Note: The other 50% in the Listahanan households are income taxpayers and are expected to benefit from the reduced tax rates.