Implementation of additional fuel excise tax on hold, Go says

MANILA, Philippines — The government will put the implementation of a second tranche of fuel excise taxes in January 2019 on hold, presidential aide Bong Go announced Sunday.

According to a video posted by GMA News, Go made the announcement at the opening of the TienDA Malasakit Store—a Department of Agriculture project to bring lower-priced goods to consumers—in Taguig City.

Go, who often represents President Rodrigo Duterte at public events, said the deferment of the second tranche is meant "to arrest the rising price of oil and its effects on the inflation rate."

He said implemetation would be deferred "until the right time."

Inflation surged to a fresh nine-year high of 6.7 percent in September after monster typhoon Ompong flattened vast swathes of farmland in northern Luzon last month, adding to the country’s food supply woes. Year-to-date, inflation average to 5 percent, well above the Bangko Sentral ng Pilipinas’ 2-4 percent target band.

Under the Tax Reform for Acceleration and Inclusion law, the government has imposed a P7 per liter tax on diesel, cooking gase, kerosene and bunker fuel as well as higher taxes on gasoline staggered over three years.

The TRAIN Law imposed a new tax of P2.50 per liter or kilogram on diesel, cooking gas, kerosene and bunker oil for electricity generation and raised the excise tax on gasoline to P7 from P4.35 per liter in 2018. 

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Under the law, the excise tax on fuel products is supposed go up another P2 per liter next year.

The TRAIN Law also has a provision to suspend a scheduled increase in the excise tax "when the average Dubai crude oil price based on Mean of Platts Singapore (MOPS) for three months prior to the scheduled increase of the month reaches or exceeds $80 per barrel."

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Energy Secretary Alfonso Cusi, said this week that the department was  "preparing a formal memo to the Office of the President to seek the suspension of the collection of excise taxes on petroleum products."

The Department of Energy said rising fuel prices are mostly because of the "current global situation" and that global oil prices tend to rise in the winter months because of the increased demand for heating.

Finance Assistant Secretary Tony Lambino also said earlier in the week that suspension of the excise tax on fuel would need action from Congress.

"The excise tax rates are provided in the law. So if we suspend based on the mechanism that is in the TRAIN Law, then that can be automatic. But if we do something else, it would require different actions," he said.

"I think we also need to manage the expectations in the sense that if Congress decides to create a new suspension mechanism, the prices of oil would not go down that much because the import price has risen from about $40 per barrel to above $80 per barrel. The import price is something unfortunately we do not control because we are not an oil producer. We are a price-taker," Lambino also said.

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