The Department of Energy (DOE) reminded oil companies to empty first their 2019 oil inventories before applying the third round of the excise tax increase to petroleum products.
The third and last tranche of tax hike under the Tax Reform for Acceleration and Inclusion (TRAIN) law will take effect January 1, 2020. There will be an increase of P1.50 per liter in excise tax on fuel starting next year. The same law states that excise tax on kerosene, liquefied petroleum gas, unleaded premium gasoline, lubricating oils will go up by P1 per liter or kilogram starting January 1, 2020.
Bunker fuel oil and petroleum coke will, likewise, be subject to another P1.50 tax per liter and metric ton, respectively.
Energy Undersecretary Jesus Cristino Posadas said oil firms should not implement the additional taxes next year if they still have old stock of petroleum products from 2019.
“The normal protocol [is for oil firms] to sell all its old stocks, both imported and produced by the refinery,” said Posadas in a mix of English and Filipino.
He meant that the sale of old stocks, referring to the remaining balance of the inventory ending December 31, 2019, which would not be covered by the third tranche of excise taxes should not be collected from the consumers. Otherwise, it would be a violation of the law—not only administrative penalties like closure of the establishment will be imposed, but also the criminal penalty of large-scale estafa.
Posadas said the DOE will strictly monitor the inventories of oil companies in order to protect consumers from unjust trading and profiteering. The DOE official believes that oil firms need not be reminded about it. “They know that already,” Posadas said.
Still, the agency’s Oil Industry Management Bureau will call the attention of the oil firms to avoid confusion. Under the TRAIN law, excise tax on fuel will go up thrice. The first round resulted in an increase of P2.50 per liter that took effect January 1, 2018.
The second tranche amounted to P2 per liter, starting January 1, 2019. Once the third tranche is implemented, the total increase in fuel excise tax will reach P6 per liter.
The implementation of the upward adjustments could be suspended if the Dubai crude oil price averages at least $80 per barrel, based on the Mean of Platts Singapore, in three months preceding the scheduled increase.