Duterte to review economic team’s move to hike fuel excise tax

Published November 30, 2018, 2:30 PM

by Francine Ciasico

By Genalyn Kabiling

The economic team’s recommendation to push through with higher fuel excise taxes next year is now under review by President Duterte, Malacañang said Friday.

Presidential Spokesman Salvador Panelo (OPS / MANILA BULLETIN)
Presidential Spokesman Salvador Panelo

“He is studying the recommendation,” Presidential Spokesman Salvador Panelo in a text message said when asked if the President will approve the proposal.

“We advise the public to wait for the President’s decision in this regard. The President’s decision will, as always, be based on national interest and benefit to the people,” he said in a later statement issued to the press.

Panelo said the economic managers’ recommendation would still subject for discussion in next Tuesday’s Cabinet meeting.

He said they could not limit the issue in a purely economic perspective, adding the President would consider the “social costs” involved amid the sentiments of the Filipino consumers.

“Due regard, however, must also be given to the dictates stipulated under the law, which only the Congress can modify,” Panelo said.

The President’s economic managers have withdrawn an earlier recommendation to suspend the second tranche of excise tax increase on petroleum products under the Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law.

The inter-agency Development Budget Coordination Committee (DBCC) instead urged the President to press ahead with the levy amid the recent drop in world oil prices.

“The recommendation comes in light of the favorable outlook in world oil prices, where the Dubai crude oil prices have gone down by 14% from an average of USD 79 per barrel in October down to USD 68 per barrel so far in November,” the DBCC said in a statement last Thursday.

“More so, the oil futures market projects the price of oil to decline further to below USD 60 per barrel in 2019, indicating a downward trend in world oil prices,” it added.

The economic team’s proposal is expected to be further tackled in the Cabinet meeting on Tuesday, December 4 and subject to the President’s approval.

The recommendation came three weeks after the President approved the suspension of fuel tax rates on oil products in a bid to tame the country’s high inflation.

Last November 8, Executive Secretary Salvador Medialdea issued a memorandum on the approval of the economic managers recommendation to suspend the additional P2 levy on oil products in January 2019. The President’s decision came even at the risk of losing P40 billion in revenues.

The memorandum was addressed to Finance Secretary Carlos Dominguez, Budget Secretary Benjamin Diokno, National Economic and Development Authority head Ernesto Pernia, and Energy Secretary Alfonso Cusi.

The memorandum was signed by Medialdea by authority of the President last November 8 but released to the media last November 14.

Under the TRAIN law, the government can suspend the next round of increase in fuel excise tax if the three-month average of Dubai crude hits $80 per barrel.