Business group backs additional fuel excise tax

MANILA, Philippines — The Philippine Chamber of Commerce and Industry (PCCI) is in favor of withdrawing the suspension of the second tranche of excise taxes on petroleum products under the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

“While PCCI championed TRAIN, it was among the first organizations to call for the suspension of the excise tax on oil because of the unrelenting increase in the global price of fuel,” PCCI president Alegria Sibal-Limjoco said in a text message to reporters.

“But with the reversal of the situation, where oil prices have gone down, even lower than the level when the excise taxes were imposed, there is no more reason to suspend the next round of excise tax,” Limjoco added.

Last week, the Development Budget Coordination Committee (DBCC) said it is no longer pushing for the suspension of the petroleum excise tax hike next year as oil prices in the world market are dropping.

Finance Secretary Carlos Dominguez III said the DBCC is now recommending that the P2 increase in the excise tax on oil be implemented in January next year as scheduled under the second phase of the tax reform package.

“The economic managers should be allowed to proceed so as to continue with the social security and infrastructure programs for which those excise taxes were imposed,” Limjoco said.

The TRAIN Law imposes a P6 increase per liter on fuel tax, which will be spread out in three years.

The first tranche of the increase, which took effect last January, increased excise tax on gasoline to P7 per liter from P4.35, while new tax rates of P2.50 per liter would be levied on diesel, P3 on kerosene and P1 per kilogram on liquefied petroleum gas (LPG).

For next year, fuel excise tax on gasoline will increase to P9 per liter, diesel to P4.50 per liter, kerosene to P4 per liter and LPG to P2 per kilogram.

An additional P1.50 per liter will be implemented in 2020 as part of the last tranche of excise tax increases under the TRAIN Law.

The PCCI earlier supported the economic managers’ recommendation to suspend the next round of increase in excise tax for fuel.

Last November, Malacañang approved the initial recommendation of economic managers to suspend the next tranche of increase in petroleum excise tax.

Dominguez said the recommendation to discontinue the suspension was made in light of the “favorable” outlook in the prices of oil in the international market, as well as easing inflation.

“With month-on-month inflation moderating due to supply-side reforms initiated by the government, coupled with falling petroleum prices in the world market, the DBCC deems the suspension unnecessary,” Dominguez said.

The finance chief, however, said the recommendation is still subject to approval of President Duterte.

On Monday, President Duterte said he will consult his Cabinet regarding the issue before making a decision.