MANILA, Philippines — Excise tax on fuel is set to further increase by P1.50 per liter starting next year, as part of the third and last tranche of the government’s tax reform program.
The excise tax hike on Jan. 1 is required under Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) act.
This will bring the total increase in fuel excise tax to P6 per liter since the law took effect on Jan. 1, 2018.
Under the TRAIN law, the excise tax on fuel was raised by P2.50 per liter effective Jan. 1, 2018 and by another P2 per liter on Jan. 1, 2019.
The law provides that the next increase would 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.
Finance Secretary Carlos Dominguez III earlier said the last tranche of increase would proceed, as the price of the commodity in the international market is not enough to trigger the suspension mechanism under the law.
“The law provides that if the price of fuel reaches a certain level, $80 per barrel, then there would be reason to suspend it. But it’s nowhere near that, so there’s no reason,” Dominguez said.
Aside from the P1.50 per liter hike in diesel excise tax, the TRAIN law will also increase the excise tax on kerosene, liquefied petroleum gas, unleaded premium gasoline, lubricating oils, processed gas and waxes and petrolatum, by P1 per liter or kilogram starting January next year.
Bunker fuel oil and petroleum coke will likewise be subject to another P1.50 tax per liter and metric ton, respectively.
According to preliminary data from the Department of Finance (DOF), total revenue generated from the implementation of the TRAIN law amounted to P91.3 billion in the first nine months of the year.
This exceeded the P77.3 billion target of the government for the same period. It also corresponds to 80.8 percent of the total projected revenue from TRAIN for full-year 2019, which is estimated at P113.1 billion.
The DOF earlier said major gains during the first three quarters came from taxes on imported petroleum products, sugar sweetened beverages, tobacco and documentary stamps.
However, the agency said shortfalls were seen in the excise tax collections for automobiles and locally refined petroleum products.