The second tranche of the fuel excise tax hike under the Tax Reform Acceleration and Inclusion (TRAIN) Law set to take effect on January 1, 2019 has been suspended.
The move comes after President Rodrigo Duterte heeded the call of economic advisers to suspend implementation citing inflationary woes and the surge in world crude prices to over $80 a barrel which resulted in several price hikes this year.
The halted implementation of the second wave of excise tax hikes on fuel would have resulted in an additional Php2 on gasoline, diesel, kerosene and LPG.
Under the Tax Reform Acceleration and Inclusion (TRAIN) Law or Republic Act 10963, which took effect this year, scheduled increases in excise taxes imposed on petroleum products from 2018 to 2020. A special provision to suspend the increases has been included should crude oil prices based on the Mean of Platts Singapore (MOPS) (averaged by three months) reache or exceed $80 per barrel.
World crude prices have since tumbled in November following oversupply with Dubai Crude at $66.91 a barrel. However, prices are seen to rebound as OPEC members are considering to cut production to ease the burn.
The suspension of the new batch of excise tax on fuel is seen to result in a Php41 billion revenue loss for the government, according to the Department of Finance (DOF).
The suspension of the excise tax is however temporary as cautioned by the DOF with the government's continued spending spree on major infrastructure projects nationwide.
"A review will be conducted six months after the suspension takes effect," said Carlos Dominguez III, Finance Secretary.
The TRAIN law ushered 2018 with increased excise taxes on petroleum products. Gasoline by Php 2.65 per liter, diesel by Php 2.50 per liter, LPG by Php 2.50 per liter, and Keresone by Php 3.00 per liter.