President Rodrigo R. Duterte has approved the implementation of the PHP2-per liter fuel excise tax hike scheduled by January next year, Malacañang said Tuesday night.
Presidential Spokesperson Salvador Panelo said Duterte announced his decision to approve the recommendation to proceed with implementing higher fuel taxes during a Cabinet meeting.
“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,” Panelo said in a press statement.
The DBCC’s recommendation is a reversal from its initial recommendation to put the hike on hold until world crude prices, which soared more than USD80 per barrel, have softened. Since then, oil prices have lowered to less than USD70 per barrel.
Panelo said the downward impact on inflation due to the steep drop in the Dubai crude oil pric, is among the factors Duterte considered in approving the DBCC’s recommendation.
He said the President also considered disruption in the “Build, Build, Build” infrastructure program and reduction in budgets, including personal services of national government agencies should the excise tax hike on fuel be suspended.
Budget and Management Secretary Benjamin Diokno said Duterte simply considered what is stipulated under the Tax Reform for Acceleration and Inclusion (TRAIN) law in making his decision.
Under the TRAIN law, the oil excise tax hike may be suspended if oil prices in the world market average USD80 per barrel or higher for three consecutive months.
Since the current oil price has gone down to US53 to US52 per barrel, Panelo said the legal requirement for the excise tax on fuel suspension cannot be met.
“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,” Diokno said in a separate statement.
Diokno pointed out that given these factors, the condition for suspension does not exist.
He also noted that at its peak, diesel price was PHP49.80 per liter, but will be PHP37.76 on January 19, inclusive of the PHP2 excise tax.
Diokno also pointed out that for gasoline (95 octane) it was PHP60.90 at its peak, but will be PHP50.82 on January 19 inclusive of PHP2 additional excise tax.
He noted that revenue loss is estimated at PHP43.4 billion if the implementation of higher fuel taxes does not push through.
Panelo, meanwhile, assured that the government will provide financial aid to Filipinos who may be affected by the higher fuel taxes.
“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 said.
Earlier, Panelo assured that Duterte will consider the sentiments of the Filipino consumers and weigh in the social costs involved in making his decision on the second tranche of excise tax on fuel. (Azer Parrocha/PNA)