DOF says no immediate plan to suspend higher excise taxes on fuel products

The government does not have any immediate plan to suspend the reformed excise tax rates on petroleum products, as this is still unwarranted under current conditions, the Department of Finance (DOF) said Monday.

Finance Undersecretary Karl Kendrick Chua said the current world prices of crude do not meet the necessary threshold for the excise taxes to be suspended.

“The DOF does not have any plans on immediately suspending the increased rates of excise taxes on petroleum products for 2018 as this is not the mechanism sanctioned by law,” Chua said in a statement.

Under the Tax Reform for Acceleration and Inclusion (TRAIN), signed into law by President Rodrigo Duterte in December, the prices per liter of liquefied petroleum gas (LPG) increased by P1, diesel by P2.50, and gasoline by P2.65 as a result of higher excise tax rates.

Data from the Department of Energy (DOE) showed that diesel prices per liter in the country now range from P41.40 to P47.78, gasoline from P50.85 to P60.85, and kerosene from P47.26 to P57.01.

The DOE intends to make a recommendation suspending the reformed excise tax rates on petroleum products if the average price of crude oil would reach $80 per barrel.

“The suspension measure only takes effect when the average Dubai crude oil price based on Mean of Platts Singapore (MOPS) for three months preceding the scheduled increase reaches or exceeds $80 per barrel,” said Chua.

“Should the price of Dubai crude keep going up and the three-month average in the last quarter of this year hits 80 dollars per barrel, we will be ready to activate the suspension mechanism for the next increase in January 2019,” he said.

Magdalo party-list representative Gary Alejano has called for an immediate review of the TRAIN law in view of rising fuel prices.

“We saw a big-time oil price hike last week which is the biggest soar this year so far. It is expected that this would continue with Department of Energy warning the public of possible hikes in the coming weeks,” he said on Sunday.

Senator Paolo Aquino has filed a bill which would restore his earlier proposal to give the government the authority to stop the implementation of TRAIN once inflation breaches the government target.

The central bank said earlier this month it expects inflation to settle at 4.6 percent this year, above the 2- to 4-percent target range of the government. —VDS, GMA News