Philippines: DOF preparing new rules to re-impose fuel excise hike as Senators sharpen calls for suspension

  • IMPLEMENTING RULES and regulations (IRR) for re-imposing the next PHP2 fuel excise tax following its planned suspension in 2019 are expected soon.
  • Finance Assistant Secretary Antonio Joselito G. Lambino II told reporters on 19 Oct 18 that the Department of Finance (DoF) and the Bureau of Internal Revenue (BIR) are currently drafting the IRR on reimposing the suspended tax hike when the global crude benchmark prices fall.
  • The tax reform law is currently silent on the conditions necessary for reimposing the fuel tax hike.
  • TRAIN-1A that took effect in Jan 19, raised fuel excise taxes by PHP2.50 per liter in 2018 and is scheduled to add PHP2/liter and PHP1.50/liter in 2019 and 2020, respectively, totaling a PHP6/liter excise tax hike.
  • Finance Undersecretary Karl Kendrick T. Chua said the law provides for automatic implementation of tax hikes such that by 2020, fuel will be taxed at the full PHP6 per liter.
  • The DoF has said that the forgone revenue from suspending the PHP2 hike in 2019 amounts to PHP41bn. Taking into account the higher value-added tax (VAT) take from higher oil prices and the peso’s depreciation, the net forgone revenue would be around PHP27bn.
  • A task force has been created to look at the possible budget cuts for non-priority expenses in order to maintain the targeted fiscal deficit ceiling at 3.2% of GDP.
  • Finance Undersecretary and chief economist Gil S. Beltran meanwhile said that while the Dubai benchmark is expected to remain elevated in 4Q18, it is expected to fall by 2019.
  • The DoF has said that the TRAIN law was not the main driver of inflation, which has hit nine-year highs. It said the main causes were a confluence of elevated oil prices, the peso’s weakening, food supply issues, and the impact of typhoons.
  • Asked whether the DoF will seek to re-impose the fuel hike within 2019 amid some political pressure in an election year, Mr. Lambino said: “I don’t think we capitulated to public pressure. I think we looked at the data we saw the drivers of inflation and we needed to anchor inflation expectations.”
  • Mr. Lambino added that the USD80 per barrel threshold may be reviewed in the future, but it was “not the intention at this point.”
  • Meanwhile, senator Sherwin T. Gatchalian has filed a resolution seeking an inquiry into the potential impact of suspending the fuel excise tax on inflation, which hit 6.7% in Sep 18.
  • Senate Resolution No. 917 was filed 10 Oct 18 following Malacañang’s decision to suspend the scheduled increase of oil excise tax in 2019. The Senate hearing is scheduled for 24 Oct 18.
  • Mr. Gatchalian, chair of the Senate committee of economic affairs, has been conducting public hearings on the tax reform law since Feb 18 to monitor its implementation of the social mitigating measures and its inflationary impact.
  • He also said the possible duration of the fuel excise tax suspension in 2019 will be discussed in the Senate hearing.
  • Senator Paolo Benigno Aquino IV continued to push for amendments to the Tax Reform for Acceleration and Inclusion (TRAIN) law on 18 Oct 18, saying the repeal of the excise tax on fuel will benefit drivers of public utility vehicles (PUVs) and commuters.
  • Aquino said if the excise taxes will be removed, PUV drivers could have an additional PHP87 in income per day. The added income is enough for PUV drivers to buy two kilos of rice per day for their families, he said. He did not bare the basis for his computation.
  • Since May 18, the senator has been pushing for the suspension and rollback of excise tax on fuel under the TRAIN law through his Senate Bill 1798 or the Bawas Presyo sa Petrolyo Bill.
  • The measure aims to suspend the collection of excise tax on fuel once inflation rate breaches the annual inflation target over a three-month period. In addition, the bill also seeks to roll back the excise tax on petroleum products to levels before the TRAIN law was implemented.
  • Aquino also joined other opposition senators led by Minority Leader Franklin Drilon and Francis Pangilinan, Risa Hontiveros, Antonio Trillanes IV and Leila de Lima in filing Senate Joint Resolution No. 15, which seeks to suspend the excise tax under the TRAIN law and mandate the rollback of fuel levies.

External Link: https://www.bworldonline.com/dof-preparing-rules-to-re-impose-fuel-excise-hike/

External Link: https://www.bworldonline.com/senate-calls-inquiry-into-fuel-excise-suspension/

External Link: https://www.philstar.com/headlines/2018/10/19/1861342/bam-aquino-seeks-repeal-fuel-excise-tax

21-Oct-2018


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