The Department of Energy (DOE) is expecting the new excise tax rates to take effect on fuel prices after January 15, 2018. This is based on the department's Executive Order 134, which requires oil companies and bulk suppliers to maintain a minimum inventory supply of liquid petroleum products for 15 days.
The department clarified the misconceptions brought about the enactment of the new tax reform law otherwise known as Republic Act 10963. Through its Undersecretary Felix Fuentebella, the DOE explained that the new excise taxes would only be applicable to new stocks imported or refined from January 1, 2018 onwards. Supply imported or processed before the implementation of the new excise taxes should not be affected by related price increase.
To ensure fair and transparent implementation of the new taxes, the regulatory body has required fuel companies to submit their stock inventories and share sales data of products to dealers or retailers.
“We have asked the oil companies to instruct their retailers to post notices once they start implementation of the new excise taxes to their retail prices,” said Fuentebella.
“Combining the department's order as well as historical and existing data and projections, the current supply of petroleum may last up to 15 days (or longer). We expect price increases to happen only after the 15th of January,” said Assistant Secretary Leonido Pulido III.
The government agency is counting on oil companies and its retailers to be fair in implementation of the new excise taxes and that they do not burden consumers with additional increases on their current or pre-TRAIN supply.
Under the Republic Act 10963, fuel products such as gasoline will be levied additional excise taxes. Previously excise tax free products such as diesel, auto LPG, and kerosene will now be subject to a new levy. Based on the exact text of the law, auto LPG will be subject to the same excise tax as diesel. The tax imposed on household or cooking LPG will be at a lower rate of PhP1.00 + 12% VAT; being an automotive website, we will only include automotive LPG in our computations.
We have prepared a simple matrix derived from average prices provided by the Department of Energy to show how the expected increases will affect prices of petroleum products. Auto LPG price, is computed at a per liter rate with a 1.96 liters per kilogram conversion against the PhP 50 per kilogram rate of household LPG.