2nd round of hiked oil taxes suspended

November 14, 2018

MALACAÑANG has approved the economic managers’ recommendation to suspend the second round of increase in excise tax rates of petroleum scheduled for 2019 under the tax reform law, Budget Secretary Benjamin Diokno said yesterday.

“I just got a word from the Executive Secretary that our proposal to suspend the oil excise tax [next year] has been approved,” Diokno said.

“I received a letter from the Executive Secretary that our recommendation has been approved... I got it yesterday,” the Budget chief said.

The Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) law, imposed a P2.50 per liter excise tax on diesel from zero and hiked the levy on gasoline to P7.00 per liter.

The law also provides that starting 2019, excise taxes for diesel will be hiked by a total of P4.50 and those on gasoline by P9.00 under the second tranche.

The increase, however, could be temporarily suspended should the average price of Dubai crude reach or exceed $80 per barrel for three months.

Despite the ongoing decline in the pump price of fuel, Diokno said, “We will stick to the plan... we already anticipated that there will be decreases in prices.”

The Cabinet official, however, said it is still not clear how the suspension of the second tranche of fuel excise tax increase will be implemented.

“I don’t know what the final text will be... It could be an Executive Order or Memorandum Circular,” Diokno said.

Asked if suspending the next round of fuel excise tax adjustments will violate the TRAIN law as the price of crude has not yet reached a three-month average of $80 per barrel, the Budget chief said it is within the prerogative of the administration to suspend its implementation.

“The government has the power to impose and suspend in light of recent developments,” Diokno said.

The Budget chief also noted that it is also still unclear how long the suspension will be imposed.

But he said there will be definitely no excise tax hike in the first three months starting January 1, 2019.

“We will evaluate it on a quarterly basis,” Diokno said.