DOE Ready to Implement 2nd Tranche of Oil Excise Tax Hike

The Department of Energy (DOE) is prepared to implement the second increase in oil excise taxes next year, which is called for under the Tax Reform for Acceleration and Inclusion (TRAIN) law.

"The DOE, in coordination with the Bureau of Customs and Bureau of Internal Revenue, is ready to implement the second tranche of excise taxes by January 1. Government devised a mechanism to closely monitor the inventories," the DOE said in a statement.

Under the TRAIN law, the government will impose a PHP2-per-liter excise tax on diesel and gasoline products, PHP1 per kilogram on liquefied petroleum gas, and PHP1 per liter on kerosene by the start of 2019.

However, the DOE noted that oil firms should not pass on the additional tax to consumers immediately as companies have inventories of 15 to 30 days.

"The sale of old stocks which was not covered by the excise taxes should not be collected from consumers," the DOE said. "Otherwise, it would be a violation of the law--not only administrative penalties like closure of the establishment will be imposed but also the criminal penalty of large-scale estafa."

Last October, the economic managers submitted to President Rodrigo Duterte the recommendation to suspend the second tranche of the excise tax, as world oil price breached the USD80-per-barrel.

However, the Chief Executive decided early this month to continue the collection of second tranche of oil excise tax after world oil prices dropped significantly.

This week, diesel and gasoline prices fell for 11 straight weeks. Gasoline prices have also decreased for eight consecutive weeks before a modest increase of PHP0.40 per liter last December 11.