DBCC to recommend second trance of excise tax hike as world oil prices soften

November 29, 2018

The Development Budget Coordination Committee (DBCC) on Thursday said they have decided to recommend the implementation of the second tranche of excise tax increase on petroleum products.

In a statement, DBCC said the recommendation comes in light of a favorable outlook in world oil prices where Dubai crude oil prices have gone down by 14 percent from an average of $79 dollars per barrel in October to $68 per barrel in November.

“The DBCC also look into consideration the adverse impact on revenues and expenditures for fiscal year 2019 should the government proceed with the suspension of the schedule increase of excise taxes on petroleum,” it said.

DBCC said if the scheduled increase in excise taxes is suspended for 12 months, this is estimated to result in net revenue loss of P43.4 billion, assuming Dubai crude oil prices average $65 dollars per barrel in 2019.

“The erosion in revenue will lead to commensurate decrease in government expenditures so as not to breach the target deficit level of 3.2 percent of Gross Domestic Product in 2019,” it said.

Finance Secretary Carlos Dominguez III in a live press briefing carried at the Department of Budget and Management's Facebook page said they will be doing President Rodrigo Duterte a disservice if they don’t discuss these developments with him.

“The circumstances have changed- This is not a rush decision. This is based on what the facts are today,” Dominguez said.

He said the expected price difference from January 2018 to January 2019 is P7.45 per liter lower.

“In January 2018, the diesel price was P40.45 per liter. The current price is P38,” he added.

The said Facebook live press conference was deleted few minutes after the press conference.

Dominguez said the decision to continue implementing the fuel excise tax is still in draft form.

The economic managers said their recommendation will be further discussed in the Cabinet meeting on December 4 and subject to the approval of Duterte. Ella Dionisio/DMS