Second tranche of excise tax on fuel set for 2019 to be suspended

The second tranche of excise taxes on oil products will be temporarily suspended, in efforts to anchor inflation expectations, a government official said Sunday.

In a statement, Finance Assistant Secretary Antonio Joselito "Tony" Lambino II said that the government will put the excise tax increase—which had been scheduled to go into effect in January 2019—on hold.

"As announced by Bong Go, the President is making an early announcement of the temporary suspension of the January 2019 oil excise increase under the TRAIN Law," he said.

The Special Assistant to the President had earlier announced the suspension on Sunday during the opening ceremony of TienDA Malasakit Store in Taguig City.

“Meron pong pinirmahan ang ating Pangulo at effective po ito sa January po. 'Yun suspension ng excise tax P2 po mula Enero para makatulong po sa pagtaas ng fuel,” Go said.

SAP Bong Go announced the suspension of excise tax on oil “until the right time” @gmanewsbreaking @gmanews pic.twitter.com/eqQsBHfCSr

— Bernadette Reyes (@bernadettereyes) October 14, 2018

Go clarified the suspension is applicable only to the second tranche following the Senate resolution for the suspension of the excise tax. The first tranche imposed in January 2018 remains.

SAP Bong Go said the suspension of excise tax on oil is applicable to the second tranche. The first tranche imposed in January this year remains. @gmanews @gmanewsbreaking pic.twitter.com/sW8wSO9psW

— Bernadette Reyes (@bernadettereyes) October 14, 2018

“Effective January pa po 'yung magiging suspension. Ina-anticipate lang po natin sakaling hindi po mapigilan 'yung presyo ng crude oil sa market. He [President Rodrigo Duterte] is very concerned talaga dito sa pagtataas ng presyo ng langis,” Go added.

Signed into law in December 2016 by President Rodrigo Duterte, the Tax Reform for Acceleration and Inclusion (TRAIN) expanded the value-added tax (VAT) base and reduced personal income taxes (PIT) starting January this year.

Under the law, excise taxes on diesel fuel were hiked by P2.50 per liter this year, excise taxes on gasoline were hiked by P7.00 per liter.

The law also provides that starting 2019, excise taxes for diesel will be hiked by P4.50 and those of gasoline by P9.00 under the second tranche.

LOOK: What's in TRAIN

The increase, however, could be temporarily suspended should the average price of Dubai crude reach or exceed $80 per barrel for three months.

"Today's price and multiple estimates of crude prices over the next two months show that the average price will stay above the $80 threshold, and it is therefore being announced early that the suspension mechanism will be activated," explained Lambino.

"This announcement is being made two months before the time required by law, to proactively anchor inflation expectations and enhance the welfare of the Filipino people," he elaborated.

Inflation was recorded at 6.7 percent in September, the fastest in over nine years since it clocked in at 7.2 percent in February 2009.

This is faster than the full-year target range of 2 to 4 percent set by the Bangko Sentral ng Pilipinas (BSP).

"After consulting the leadership of both the Senate and the House of Representatives, as well as the economic team, the President is confident that this course of action will help anchor inflation expectations for the coming year, allow the public to manage their finances better, and disallow hoarders and profiteers from taking advantage of the situation," Lambino said.

According to the latest available data from the Department of Energy (DOE), gasoline prices in the country currently range from P53.55 to P67.35 per liter, diesel from P47.05 to P56.35, and kerosene from P51.17 to P61.30.

Last week, DOE Assistant Secretary Leonido "Bodie" Pulido III said they were going to write the Department of Finance for the possible suspension of excise tax on fuel after international oil prices breached $80 per barrel.

Sotto credits senators' plea

In a separate statement, Senate President Vicente Sotto III credited the suspension to a letter sent to Duterte by several Senators on October 9.

"[C]onsidering that the high crude oil prices are projected to continue increasing, we respectfully request your Excellency and DOF Secretary Carlos Dominguez III to support our initiatives to suspend any further increase in excise taxes on diesel, gasoline, and other petroleum products before the TRAIN Law's 'trigger period'," the letter read.

Aside from Sotto, the letter was signed by Senators Ralph Recto, Juan Miguel Zubiri, Loren Legarda, Sonny Angara, Nancy Binay, Joseph Victor Ejercito, Francis Escudero, Sherwin Gatchalian, Richard Gordon, Gregorio Honasan II, Panfilo Lacson, Emmanuel Pacquiao, Aquilino Pimentel III, Grace Poe, Joel Villanueva, and Cynthia Villar.

"That is the reason PRRD decided to suspend excise tax," claimed Sotto.

According to Majority Leader Zubiri, they actually discussed the matter with Duterte in a meeting last week, and Finance Secretary Carlos Dominguez III just asked the senators to formalize their request in a letter. — with a report by Jon Viktor D. Cabuenas/KG/BM, GMA News