Duterte OKs 2nd Tranche of Oil Tax Hike, to Take Effect January 2019

It looks like we only have until this month to enjoy the happy days of the oil price rollback--now on its eight week this week--as President Rodrigo Duterte has reportedly approved the implementation of the PHP2-per-liter fuel excise tax hike scheduled to take effect by January 2019.

According to Presidential Spokesperson Salvador Panelo, Duterte announced his decision to push through with implementing the higher fuel taxes during a Cabinet meeting.

"The President has approved the recommendation of the Development Budget Coordination Committee (DBCC) to proceed with the implementation of the second tranche of excise tax on fuel, effective January 2019," Panelo said in a statement, adding that the downward impact on inflation due to the drop in the Dubai crude oil price is among the factors Duterte considered in approving the DBCC's recommendation. Panelo also noted that suspending the fuel excise tax hike would disrupt the government's 'Build, Build, Build' infrastructure program and reduce its budgets, including personal services of national government agencies.

Budget and Management Secretary Benjamin Diokno added that Duterte simply considered what is stipulated under the Tax Reform for Acceleration and Inclusion (TRAIN) law in making his decision.

Under the TRAIN law, the oil excise tax hike may be suspended if oil prices in the world market average USD80 per barrel or higher for three consecutive months. Since the current oil price has gone down to US53 to US52 per barrel, the legal requirement for the excise tax on fuel suspension cannot be met.

"He's simply implementing the (TRAIN) law," Diokno said in a separate statement.

Caltex, PNB

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