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News / 12-05-18

Fuel prices go too low; PRRD reverses excise tax suspension in 2019

Php 2 per liter fuel excise tax to be implemented January 2019


By Eric Tipan

 

Less than a month after approving the suspension of the next tranche of the fuel excise tax in 2019, President Duterte, on the recommendation of the Development Budget Coordination Committee (DBCC), will proceed with the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law next year.

The Php 2 per liter excise tax is set to go on top of the existing fuel prices by January 2019

“The President has approved the recommendation of the Development Budget Coordination Committee (DBCC) to proceed with the implementation of the second tranche of excise tax on fuel, effective January 2019,” said Presidential Spokesperson Salvador Panelo.

This reversal by the DBCC comes in the wake of oil prices that have gone down below US$ 70 per barrel.

A major consideration by the President was the various infrastructure projects of the administration under the ‘Build, Build, Build’ program, which may have been disrupted because of budget constraints caused by the fuel excise tax suspension.

Estimated revenue loss would have been Php 43.3 billion had the fuel excise tax suspension pushed through.

Budget and Management Secretary Benjamin Diokno said the President made the decision based on stipulations under the TRAIN law.

“He’s simply implementing the (TRAIN) law. The sharp turnaround in world crude prices. From a peak of close to USD80 per barrel to USD68 per barrel in November. 29, with Dubai Futures prices projecting further decline below USD60 per barrel in 2019,” said Diokno.

“While the oil excise tax increase is a negligible contributor to inflation, we still commit to provide financial assistance to the 50 percent poorest households,” Panelo added.