THE Development Budget Coordination Committee (DBCC) may reconsider at its next meeting its earlier recommendation to the President to suspend the second tranche of oil excise tax hikes for 2019, Budget Secretary Benjamin E. Diokno said.
“There will be a DBCC meeting on Thursday. We will tackle that precisely because now…. The prices of oil in the world market have gone down to $60 [per barrel], so we will discuss it and make the announcement,” said Diokno, who is the chairman of DBCC.
The budget chief’s statement came after Finance Secretary Carlos G. Dominguez III said on the sidelines of the Sulong Pilipinas economic forum on Monday that the government is reviewing the plan to suspend the next tranche of oil excise taxes following the downtrend of oil prices in the global market.
The recommendation to suspend the 2019 tranche of higher oil excise taxes, as provided under the Tax Reform for Acceleration and Inclusion (TRAIN) law, was spurred by rising inflation that breached 6.7 percent. Some sectors said the galloping inflation was substantially caused by the first wave of higher fuel excise taxes imposed with the TRAIN’s signing on January 1, which critics said compounded the steady rise in world petroleum prices.
Meanwhile, Cabinet Secretary Karlo Alexei B. Nograles said in a chance interview with reporters on Tuesday that the recommendation to suspend the increase in oil excise tax for next year will still be discussed in the Executive branch.
“Obviously, we have to adjust with the circumstances to adjust with what’s happening,” Nograles said.
Earlier this month, President Duterte approved the recommendation of economic managers to suspend the increase in fuel excise tax of P2 per liter in 2019, bringing the excise tax on diesel to P4.50 per liter.
The recommendation of the economic managers came at the time that world oil prices hovered around $80 per barrel.
The Tax Reform for Acceleration and Inclusion (TRAIN) law provides that: “For the period covering 2018 to 2020, the scheduled increase in the excise tax on fuel as imposed in this section shall be suspended when the average Dubai crude oil price based on Mean of Platts Singapore [MOPS] for three months prior to the scheduled increase of the month reaches, or exceeds $80 per barrel.”
The Department of Finance has said suspending the scheduled excise tax increase for fuel in 2019 may lead to an estimated revenue loss of P41 billion. However, the DOF also said the value-added tax collections pegged at P14 billion may help offset the losses.