Philippines: Malacañang approves oil tax hike suspension

• Malacañang on 13 Nov 18 greenlighted the economic managers’ proposal to suspend the new round of oil tax hike in 2019, as the government wrestles with high inflation.
• To combat surging prices, the Duterte government said it would suspend an increase in oil taxes scheduled to be levied in Jan 19. This is in addition to recent measures announced to lower food prices such as liberalizing the importation of rice, a main staple.
• Prices began soaring at the start of 2018 after the government slapped higher excise taxes on fuel and other commodities. The price increases quickly spread to cover more goods—worsened by a weakening Peso.
• “Although we already anticipated that price of oil will be much lower in 2019, so if you ask me I will recommend that we stick to the decision not to impose additional P2 [excise tax] in the meantime,” Diokno added.
• The Department of Finance estimates that suspending the additional excise taxes on fuel in whole 2019 could result in foregone revenues of PHP41.6bn. But the projected losses could be offset by an estimated PHP14bn value added tax collections from fuel products.
• At a congressional hearing in Oct 18, Finance Undersecretary Karl Kendrick Chua said postponing the fresh fuel tax hike may only cover a quarter of 2019, and not the entire year.
• According to Diokno, the government will evaluate the oil tax suspension on a “quarterly basis” to determine the length of the postponement.

External Link: https://www.philstar.com/business/2018/11/14/1868542/malacaang-approves-oil-tax-hike-suspension