Fuel tax suspension to cost govt P40B – DoF
The government could lose as much as P40 billion in gross revenues if the government heeds calls for the suspension of the higher fuel excise tax next year, a senior Finance department official warned.
“For sure, the fuel tax revenue next year is minus P40 billion [if the tax hike is shelved],” Finance Undersecretary Karl Kendrick Chua told reporters in an interview.
The Tax Reform for Acceleration and Inclusion (Train) law, implemented at the start of the year, calls for higher fuel taxes next year. Substantial pump price increases since the law took effect have lead to calls from various sectors to suspend the adjustment.
The Philippine Chamber of Commerce and Industry (PCCI) on Thursday backed calls for the suspension, saying higher fuel prices would exacerbate above-target inflation.
“We go for that (a suspension) because the next [tax]increase in fuel is high,” PCCI president Alegria Limjoco said at the sidelines of a press conference for the upcoming Philippine Business Conference (PBC).
The Employers Confederation of the Philippines (ECOP) earlier advised the government to delay fuel tax increases.
ECOP said that while it would be difficult and unproductive to reverse Train 1 and delay the implementation of Train 2, the government can consider suspending any further automatic increase in taxes on petroleum products in the coming years.
As of Thursday, Dubai crude oil price hit $83.92 per barrel. Since the Train implementation in January, domestic prices of diesel, gasoline and kerosene rose to P12.50, P12.80, and P11.35 per liter based on oil prices announcements of oil firms every week.
Under the Train law, taxes on diesel are scheduled to go up to P4.50 per liter next year from P2.50 per liter this year. Meanwhile, taxes on gasoline will rise to P9 per liter in 2019 from P7 per liter this year.
Chua said the worst-case scenario would depends on the duration of the suspension, adding that discussions on how to properly reinstate or resume the measure are ongoing.
He also stressed that economic managers had yet to review if there is really a need to suspend the implementation of higher excise tax rate of fuel next year.
“So well see if its averaging $80 per barrel for the next three months. We will have to review the assumptions,” Chua said.
He was referring a provision in the law that said suspension on higher fuel excise tax rates only takes effect when the average Dubai crude oil price based on Mean of Platts Singapore for three months preceding the scheduled increase reaches or exceeds $80 per barrel.
Meanwhile, Limjoco said they already informed the Department of Finance (DOF) about the PCCI’s request.
“What DOF Undersecretary Karl Chua said is that the suspension would be difficult. The recommendation was it would be better if they give subsidy to those in need.
“But we will still discuss it during the PBC. We now have a position paper and we will still push it to be suspended during the PBC.”
Aside from ECOP and PCCI, the Energy department also earlier urged Congress to “consider” amending the Train which would facilitate the suspension of higher taxes on fuel.
With a report from ANNA LEAH E. GONZALES
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