MANILA, Philippines – Economic managers seemed to be united in proposing the suspension of the second round of fuel excise tax hikes for next year. But a recent economic bulletin from the Department of Finance (DOF) suggested that the planned suspension may no longer be necessary.
Finance Undersecretary Gil Beltran said on Wednesday, October 17, that data from S&P Global Platts indicated Dubai crude oil futures for November and December hover at $77 per barrel, down from the $80 per barrel figures posted on October 8.
“While Dubai crude oil price levels for the next 6 months using October 8 futures prices would have required suspension of the adjustment in excise tax for the next 6 months, the latest price levels show otherwise,” Beltran said.
The DOF’s chief economist also said that the actual price of Dubai crude oil declined by almost 3% to $80.19 per barrel last October 12 from the $82.58 per barrel last October 8.
Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, the excise taxes on diesel and gasoline would be increased by P2 per liter effective January 1, 2019. It would also be hiked by another P1.50 per liter in 2020.
To protect consumers from spiraling prices, the law includes a provision stating that tax hikes may be suspended if Dubai crude oil prices average at $80 per barrel or higher for 3 straight months.
The Bangko Sentral ng Pilipinas earlier proposed new macroeconomic assumptions for crude oil prices in the medium term. (READ: Inflation up, GDP down: Economic managers revise PH outlook)
“This implies 39.1% rise in the midpoint price assumption in 2019, 30.4% rise in 2020, and 21.7% rise in 2021 and 2022,” Beltran said.
Economic managers earlier recommended the suspension to President Rodrigo Duterte.
The DOF estimated revenue losses of over P40 billion should the suspension push through. It may also result in certain projects getting cut.
Various global developments like the trade war between the United States and China and the declining production in Venezuela have affected oil prices in most regions.
Prices of gasoline and diesel have jumped by over P10 in 2018.
The minimum jeepney fare in Metro Manila, Central Luzon, and Calabarzon is set to go up by P2 in November, reaching P10 amid high fuel prices.
Transport cost has increased by 8% as of September year-on-year. – Rappler.com
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