Clark Freeport, Pampanga”•Finance Secretary Carlos Dominguez III said Monday the government is reviewing the plan to suspend the second tranche of oil tax increase following the recent downtrend in global petroleum prices.
“We are currently reviewing this… Oil prices now [I think[ hover around $55 per barrel,” Dominguez said at the sidelines of the Sulong Pilipinas economic forum at the Asean Convention Center here.
He said the current prices were significantly lower than the peak of $80 per barrel on Oct. 5.
Malacanang has given the go-signal for the economic managers’ proposal to suspend the new round of oil tax hike next year, taking into account its contribution to inflation.
Inflation in September and October reached a nine-year high of 6.7 percent. This brought the average inflation in the first 10 months to 5.1 percent, above the target range of 2 percent to 4 percent for 2018.
The Duterte government suspended the scheduled increase in oil taxes in January next year in addition to recent measures announced to lower food prices such as liberalizing the importation of rice.
Under the Tax Reform for Acceleration and Inclusion Act or Train law that took effect in January, the increases in petroleum taxes would be automatically postponed once the average price of Dubai crude “• which is used as benchmark for Asia “• reached $80 per barrel for three consecutive months before the next round of tax hike.
Global oil prices have been declining since October, encouraging oil companies to implement a series of price rollbacks for gasoline, diesel, and kerosene.
The Train law cut personal income taxes but raised taxes on tobacco, oil, sugary drinks, automobile, and alcohol. Under the law, an excise tax of P2.50 a liter was imposed on diesel and bunker fuel starting January 2018. This rate will go up to P4.50 in 2019 and P6 in 2020.
According to the Finance Department’s estimates, the government would lose around P41 billion in revenues if it would suspend the second round of oil tax hike.
The DoF said the projected losses could be offset by an estimated P14 billion in value-added tax collections from fuel products.
