With the prices of oil per barrel expected to break the $80 mark, the Department of Finance has announced the suspension of the fuel excise tax's next phase. According to finance secretary Carlos Dominguez, President Rodrigo Duterte will soon order a temporary suspension of the second round of fuel excise taxes, which would have taken full effect come January 2019.
Now, this does not mean the current prices of fuel will go down. The first phase of the excise tax will still remain in place. Subsequent fuel price hikes will be the result of global oil costs going up and not due to the excise tax. At the present, there is an additional Php 2.50 tax on diesels while unleaded fuel carries an additional Php 7.00 tax on top of the standard fuel prices.
According to Section 43 of RA10963, also known as the TRAIN Law, it states, “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 (3) months prior to the scheduled increase of the month reaches or exceeds Eighty dollars (USD 80) per barrel".
That means motorists can breathe a sigh of relief by January 2019 as additional taxes will not be imposed indefinitely. The second part of the excise tax will see another Php 2.00 tax added on top of the current fuel prices, bringing it up to Php 4.50 per liter for diesel, and Php 9.00 for unleaded.
Fuel prices worldwide have taken a hit due to the impending sanctions imposed by the US to Iran. With that, Iran is not allowed to trade fuel, among other things, and consequently, 3 percent of the world's fuel supply will be lost. Iran stands to lose 1.5 million barrels per day when the sanctions are imposed by November.
To compensate, the US and Organization of Petroleum Exporting Countries (OPEC) will be tapping into their reserves but they say it will not be enough to offset the loss of Iran as a global supplier. Compounding the issue is the fact that oil from the US and OPEC nations are bought using the US Dollar. With Southeast Asian currencies weak at the moment, fuel prices may most likely still go up.