The Department of Energy is preparing to implement the second tranche of excise taxes on oil products by Jan. 1 which is expected to raise prices at the pump, a government official said Wednesday.
“The DoE, in coordination with the Bureau of Customs and the Bureau of Internal Revenue, is ready to implement the second tranche of excise taxes by Jan. 1. Government devised a mechanism to monitor closely the inventories,” Energy Undersecretary Felix William Fuentebella said.
Fuentebella said the sale of old fuel stocks would not be covered by excise taxes and should not be collected from the consumers.
“Otherwise, it would be a violation of the law”•not only administrative penalties like closure of the establishment will be imposed but also the criminal penalty of large-scale estafa,” he said.
“We have to ensure the proper implementation of the Train [Tax Reform for Acceleration and Inclusion] law because the collection will be used to support our ‘Build, Build, Build’ programs, free tuition and medical assistance for our needy kababayans,” he said.
The department supported the recommendation of the Finance Department for the continued implementation of the second tranche of excise tax increase on petroleum products under Republic Act No. 10963, or the Train law.
“The excise tax will proceed because the country will really need to build infrastructures, so we need the funds,” Cusi said.
Finance Secretary Carlos Dominguez III earlier said the government’s decision followed the favorable outlook in world oil prices, as the cost of Dubai crude oil prices declined 14 percent from an average of $79 per barrel in October to $68 a barrel in November.
Under the Train law, the government imposed an excise tax of P2.50 a liter on diesel and bunker fuel on Jan. 1, 2018. The rate will go up to P4.50 in January 2019 and P6 in January 2020.
The law provides that the increase in petroleum taxes will be automatically postponed if the average price of Dubai crude”•used as benchmark for Asia”• reached $80 per barrel for three consecutive months before the next round of tax hike.
World oil prices, however, plummeted in the past weeks, forcing the government to continue the implementation of the additional excise tax on petroleum products.