The House bill born out of the oil price shock driven by the crisis in the Middle East has cleared the deliberation stage in the lower chamber.

At its core, the Kalinga bill — short for “Komprehensibong Alalay Sa Livelihood, Inflation, Negosyo at Goods Assistance” — outlines an emergency response framework. While the document has provisions on financial aid, ways and means chairman and sponsor Miro Quimbo insists it represents only less than 20% of the bill’s total scope.

The revised version, House Bill No. 9305, sets objective triggers that would allow the president to declare a state of national emergency in times of extraordinary oil price volatility, and grant him temporary powers on budget release and realignment, direct assistance, moratorium, and price stability, among others.

This latest version passed by the plenary on second reading on May 20 contains substantial changes from the original bill filed by Speaker Bojie Dy and Majority Leader Sandro Marcos.

What are these changes?

Kalinga National Response Council as primary body

Lawmakers want to establish a primary body that will coordinate the government’s response during a national energy emergency.

In the original House Bill No. 8834, it was called the Kalinga Interagency Task Force. In HB 9305, it has become the Kalinga National Response Council.

In the context of this proposal, the council is important because it has the discretion to recommend the declaration of an emergency to the president.

The council, in the latest version of the bill, will still be chaired by the executive secretary and co-chaired by the secretaries of energy and finance. The membership though has been expanded to include the secretaries of ICT, interior, labor, and migrant workers, on top of the secretaries of economy, budget and management, agriculture, transport, social welfare, agriculture, trade, and the Bangko Sentral ng Pilipinas governor.

More specific emergency declaration triggers

The approved bill, unlike in the original version, now explicitly states that an emergency declaration can be made when the average Dubai crude oil price hits $80 per barrel for 30 days preceding the declaration.

Other triggers include a domestic fuel price increase of at least 30% within a period of 30 days before the declaration, or a dip in fuel supply.

The House, however, approved Murang Kuryente Representative Arthur Yap’s proposed amendment in the plenary to specify the inventory dip per fuel type — below seven days for LPG, below 15 days for refined oil products, and below 30 days for crude oil. Quimbo acknowledged that the phrasing on the fuel supply dip in the original bill was “too general.”

These measurable triggers contained in the proposal essentially empower the president to make a national emergency declaration without having to wait for a new legislation from Congress. Usually, the president waits for the legislative to pass a measure allowing him to exercise emergency powers, in accordance with the Constitution.

Expanded coverage of temporary moratoriums

The original bill intended to provide temporary moratorium on small businesses, but the substitute bill broadened the coverage.

Under the substitute bill, the relief can be maximized by the general public. Banks and other lending institutions shall grant a minimum 30-day moratorium on the principal and interest payments of all outstanding loans, including salary, personal, housing, agricultural, MSMEs, and transport-related loans.

The House also accepted SAGIP Representative Paolo Marcoleta’s proposal to include a moratorium on the payment of tuition fees for private schools.

Financial aid

The substitute bill provided more specifics on the ayuda that certain sectors will get during a national energy emergency:

• emergency cash transfers to qualified low-income and near-poor households, subject to availability of funds
• food assistance, transport support, fuel-related relief, or other forms of direct assistance to affected households
• P500 deduction or bill credit for households consuming 100 to 150 kilowatts per hour
• digital or physical vouchers redeemable for food, fuel, tranport, utilities, or other essential goods
• fuel subsidies, fuel vouchers, fuel cards, or fuel discount mechanisms for qualified farmers, fisherfolk, agricultural producers, fisheries producers, farmers’ cooperatives and associations, logistics providers of essential goods
• fare subsidy, service contracting, or similar commuter support programs to mitigate fare hike
• temporary commission reductions and incentive rebates for delivery riders and platform-based drivers
• energy or fuel rebates for MSMEs
• fuel, transport, food, livelihood or other appropriate assistance to migrant workers

Option to suspend VAT

The original bill mentioned the suspension or reduction of fuel excise tax, but not VAT. The substitute bill now provides the option for this or its reduction for a maximum of 60 days.

Batangas 1st District Representative Leandro Leviste tried to strong-arm Quimbo into reducing the VAT rate from 12% to 10%, but Quimbo explained that lawmakers cannot put two topics in one bill.

No more windfall profit tax

It was not in the initial bill, but the revised bill that hurdled the ad hoc committee on legislative energy action and development (LEAD) sought to impose a 15% windfall profit tax on oil companies. Essentially, it will force these entities to pay an extra tax on the accidental surplus profits they rake in during times of crisis.

APEC Representative Sergio Dagooc, however, moved to delete this provision from the bill during the period of amendments due to supposed difficulty in monitoring its implementation. Quimbo accepted the proposal.

Renewable energy shift incentive

If a business switches to renewable energy, it can claim an extra 50% tax deduction on top of their regular business expenses. This provision is in the final version that cleared plenary deliberations, but not in the initial bill.

What happens next

The bill now undergoes a final vote, but given that the proposal originated from the House leadership, it is expected to overwhelmingly pass on third reading, despite potential objections or reservations by some opposition lawmakers.

There is no Kalinga bill yet in the upper chamber. Lawmakers have their work cut out to reconcile this proposal with possibly a totally different relief package or oil price shock-related response measure from the Senate. – Rappler.com