Nation to feel impact of higher excise tax rates on fuel products starting Jan. 15 —DOE

The country will start to feel the impact of higher excise tax rates on fuel products like  diesel, gasoline, and cooking gas within the next two weeks as a result of the government’s tax reform program.

Pump prices of petroleum products are likely to reflect the higher excise tax rates under the Tax Reform for Acceleration and Inclusion law on Jan. 15, 2018, the Department of Energy (DOE) said Wednesday.

“We expect the increase in the liquid petroleum prices as based on the new excise taxes under the TRAIN law should increase 15 days after January 1,” Energy Assistant Secretary for Oil Industry Management Bureau Bodie Pulido told reporters in a press conference in Taguig City.

“We are basing this assumption on two things: the Executive Order 134 that requires minimum inventory for liquid petroleum products for 15 days, and based on the data in the possession of the DOE, made available to us by oil companies,” Pulido noted.

“So, we believe that the existing old stocks will take 15 days before it is exhausted,” he said.

Thus, the DOE is assuming that the prices of liquid petroleum products will not increase within the first two weeks of January.

As a result of the recently approved tax reform law or Republic Act No. 10963, diesel gets an excise tax of P2.50 per liter from zero while the excise tax on gasoline rises to P7 from P4.35 in the first year of implementation.

The excise tax rates on diesel will go up to P6 per liter by 2020, and on gasoline to P10.

The DOE clarified earlier the new excise tax rates will not affect prices of old inventory, considering that excise taxes are levied upon importation and not at the point of sale to consumers.

“Of course, it may be possible that their stocks may last much, much longer. So we will be validating by random inspections to make sure na masusunod ‘yung batas and the oil players are cooperating with us,” Pulido noted.

“We will make sure that the old stocks will not be sold under the new excise tax rates,” he said.

Energy Undersecretary and DOE spokesperson Felix Fuentebella said the department required oil companies to have postings at the retail level informing the public when pump prices reflect the new excise tax rates.

“The oil companies will also require the retailers to post, for transparency, what products will be charged with excise tax and when the excise tax is applicable,” Fuentebella said.

“They have also agreed to share the data regarding their sales to the dealers/retailers in order to determine which stocks will be applied with excise tax,” the Energy official added.

The DOE and relevant government agencies such as the Department of Trade and Industry, Department of Finance, and local government units will conduct random audit and monitoring on compliance with the new tax reform law both at the depot or refinery and the retail levels. — VDS, GMA News