By Rea Cu, November 15 2018; Business Mirror


Image Credit to Philippine Daily Inquirer

THE government is holding off the increase in fuel excise tax of P2 per liter in 2019, as President Duterte has given his go-ahead to the inflation-busting recommendation of economic managers.

Budget Secretary Benjamin E. Diokno said the President may issue an executive order (EO) or a memorandum circular (MC) to authorize suspension of the scheduled hike in fuel excise tax.

Diokno, Finance Secretary Carlos G. Dominguez III, and Socioeconomic Planning Secretary Ernesto M. Pernia were informed by Executive Secretary Salvador C. Medialdea that the President has approved their proposal in a memorandum dated November 8. Energy Secretary Alfonso G. Cusi was also given a copy of the memo.

“I don’t know whether [the suspension] will come in the form of an EO or MC. I got the letter [on Tuesday] informing us that our recommendation has been approved,” Diokno told reporters in a news briefing on Wednesday.

Economic managers made a pitch for suspending the scheduled increase in fuel excise tax after inflation surged in recent months.

Diokno said economic managers will still have to firm up mechanism for resuming the increase in excise tax, adding that they will undertake a quarterly review to determine when the excise tax increase could be implemented.

The budget chief also said items in the budget that can be removed to compensate for the revenue loss due to the suspension of the fuel tax increase will be discussed by the task force in December.

“We have not talked about it yet; we will discuss it in December, we are busy talking about the budget,” he added.

Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, the excise tax on diesel imposed in 2018 is at P2.50 per liter, which will gain an additional P2 in 2019, and P1.50 per liter in 2020. This brings the excise tax on diesel to P4.50 per liter in 2019, and P6 per liter in 2020.

From the previous P4.35 per liter, excise tax on gasoline was increased to P7 this year, with an additional P2 increase in 2019, and P1 in 2020. For 2019 and 2020, the rates will be at P9 per liter and P10 per liter, respectively.

Under the TRAIN law, the excise tax increase may be suspended if the international price of Dubai crude breaches the $80-per-barrel threshold for three months. The law was silent on the mechanism for lifting the suspension.

The DOF said suspending the scheduled excise tax increase for fuel in 2019 may lead to an estimated revenue loss of P41 billion. It added, however, that value-added tax collections, pegged at P14 billion, may help offset part of the losses.