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Philippines – DOF: Recommendation to suspend fuel tax stands
MANILA, Philippines — The Department of Finance (DOF) said yesterday it is maintaining its recommendation to suspend the next increase in fuel excise tax in January despite declining Dubai crude oil prices.
“The recommendation to suspend stands. We are anticipating a formal announcement from OP (Office of the President),” Finance assistant secretary Antonio Lambino said when asked whether the suspension would proceed.
The official reiterated that the review of the suspension, if warranted, would take place next year.
“The review will happen at some point next year after the suspension is implemented,” he said.
Earlier, the DOF said in its economic bulletin that the suspension of the next fuel excise hike may not be necessary anymore as the futures prices of Dubai crude oil for November and December 2018 dropped below the $80 per barrel level.
Citing data from the S&P Global Platts as of Oct. 12, Finance Undersecretary Gil Beltran said the Dubai crude oil futures for November and December 2018 stood at around $77 per barrel, down from the Oct. 8 figures of above $80 per barrel.
He said the actual price of Dubai crude oil also declined by nearly three percent to $80.19 per barrel last Oct. 12 from $82.58 per barrel on Oct. 8.
However, Beltran later on clarified that Dubai crude oil prices may still go up by November as the US’ sanctions against Iran kick in.
“Experts tell us that prices are very volatile and will go back up due to Iran sanctions starting Nov. 4 and Valenzuela’s declining exports,” the DOF’s chief economist said.
Under the TRAIN Law, the excise tax of fuel increased by P2.50 per liter effective Jan. 1, and will continue to rise by another P2 per liter in Jan. 1 next year, and P1.50 per liter by 2020.
However, the law provides that the next increase should be suspended if the Dubai crude oil price averages at least $80 per barrel, based on the Means of Platts Singapore, in three months preceding the scheduled increase.
Should the suspension push through, the DOF earlier said the government may incur as much as P41 billion reverse losses in a year.
However, the agency said this would be slightly offset by higher value-added tax (VAT) collections from higher fuel prices, as well as the depreciation of the peso.
Economic managers have said the government may cut some of its non-infrastructure expenditures to compensate for the lost revenues.
Source: https://www.philstar.com/business/2018/10/19/1861182/dof-recommendation-suspend-fuel-tax-stands#DwJMrYIxCqmQuygb.99