Duterte OKs suspension of oil excise taxes by January 2019

October 15, 2018

President Rodrigo Duterte has approved the suspension of the excise tax on oil starting January next year as fuel prices are not expected to decline until the end of the year, his economic managers said on Monday.

"Suspension of the second tranche starting Jan. 2019 was recommended by the economic team and already approved by the President," Socioeconomic Planning Secretary Ernesto Pernia said in a text message to the Daily Manila Shimbun.

Asked if the suspension of the excise tax on oil would still push through even if the prices of oil would go down, Pernia said, "we expect world oil price to average around $80/barrel next three months."

Under the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the government will suspend the fuel excise taxes 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.

To carry this out, the Department of Finance shall perform an annual review of the implementation of the excise tax on fuel and shall, based on projections provided and recommendations of the Development Budget Coordination Committee, as reconciled from the conditions as provided above, recommend the implementation or suspension of the excise tax on fuel. The law also provides that the recommendation shall be given on a yearly basis and that any suspension of the increase in excise tax shall not result in any reduction of the excise tax being imposed at the time of the suspension.

In a separate text message, Budget Secretary Benjamin Diokno, DBCC head, said Duterte has given his nod to suspend the excise tax on fuel.

"Yes, it was approved," he told the Manila Shimbun.

Asked when Duterte approved the economic managers' recommendation, the Budget chief said, "(I) think he made that decision when we were in Bali (Indonesia)."

Duterte, along with his Cabinet members, went to Bali last week to join other Southeast Asian leaders in a gathering.

Diokno, however, said he was not sure if Duterte has signed an order or not regarding the suspension of the excise tax on oil.

Some lawmakers have been calling for the immediate suspension of the fuel excise taxes due to the rising inflation, which hit 6.7 percent in September, the highest in nine years. Celerina Monte/DMS