The new year will usher in fuel price increases as higher excise taxes brought by the tax reform law come into effect. Under Republic Act 10963, otherwise known as the Tax Reform for Acceleration and Inclusion (TRAIN).
Expected increases due to new excise taxes will be as follows:
- Gasoline – P2.65 + 12% VAT
- Diesel – P2.50 + 12% VAT
- Auto LPG – P2.50 + 12% VAT
- Kerosene – P3.00 + 12% VAT
- Lubricants and Greases – P3.50 + 12% VAT
Crude oil prices in the Mean of Platts Singapore (MOPS) index has been trending on the high side since November as increased demand during winter affects global prices. This is expected to affect prices in the coming months as well.
Excise tax on fuels will again increase by 2019 and 2020, based on the newly signed tax reform law. 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) reaches or exceeds $80 per barrel.
The Department of Energy has clarified that only new stocks imported after January 1, 2018 should be affected by the new excise taxes, and retailers should not be implementing the new excise tax to customers yet.
"The OIMB has issued an advisory to petroleum products stakeholders NOT to levy new Excise Tax rates on old stocks, considering that Excise Taxes are levied upon importation and not at the point of sale to the consumers," Assistant Secretary Leonido Pulido III clarified.