Citing data from the S&P Global Platts as of Oct. 12, Finance Undersecretary Gil Beltran said the Dubai crude oil futures for November and December 2018 stood at around $77 per barrel, down from the Oct. 8 figures of above $80 per barrel.
Miguel De Guzman
Dept. of Finance backpedals on fuel tax suspension
Mary Grace Padin (The Philippine Star) - October 18, 2018 - 12:00am

MANILA, Philippines — The suspension of the next increase in fuel excise tax may no longer be necessary given the declining price of Dubai crude oil in the global market, the Department of Finance (DOF) said yesterday.

Citing data from the S&P Global Platts as of Oct. 12, Finance Undersecretary Gil Beltran said the Dubai crude oil futures for November and December 2018 stood at around $77 per barrel, down from the Oct. 8 figures of above $80 per barrel.

He said the actual price of Dubai crude oil also declined by nearly three percent to $80.19 per barrel last Oct. 12 from $82.58 per barrel on Oct. 8.

“While Dubai crude oil price levels for the next six months using Oct. 8 futures prices would have required suspension of the adjustment in excise tax for the next six months, the latest price levels show otherwise,” Beltran said.

However, Finance Assistant Secretary Antonio Lambino said the government would still push through with the suspension of the excise tax hike in January next year. But he said the DOF may need to review its implementation depending on the price of Dubai crude oil.

“The decision to suspend was made when the prevailing and futures market prices were above $80 per barrel. We will review the decision at some point next year after the suspension is implemented,” he said.

Under the new tax reform law, the excise tax of fuel increased by P2.50 per liter effective Jan. 1, and will continue to rise by another P2 per liter in January 1 next year, and P1.50 per liter by 2020.

However, the law provides that the next increase should be suspended if the Dubai crude oil price averages at least $80 per barrel, based on the Means of Platts Singapore, in three months preceding the scheduled increase.

The economic team earlier said it recommended the suspension of the tax hike given the volatility in crude oil prices due to the trade war between the US and China, the sanctions imposed on Iran, and the declining oil production of Venezuela.

Meanwhile, Budget Secretary Benjamin Diokno said the government may not increase the benefits of jeepney operators and drivers under the Pantawid Pasada Program due to the suspension of the next increase in fuel excise tax.

Diokno said the benefits under the Pantawid Pasada Program for next year may remain unchanged from the 2018 level given that the proposed increase in the program’s 2019 funding is reliant on the P2 per liter adjustment in excise tax.

“The Pantawid Pasada for next year is premised on the P2 adjustment. Now, if the P2 adjustment is suspended, then the Pantawid Pasada benefits will be based on the 2018 (level),” Diokno said.

The TRAIN Law provides provisions earmarking the proceeds from the excise tax increase for social mitigating measures, including the Pantawid Pasada program.

This year, the DBM allocated P977 million for the program, which seeks to provide fuel subsidy to public utility jeepneys with franchise from the Land Transportation Francising and Regulatory Board.

The DBM earlier said 179,852 jeepney drivers would receive fuel vouchers amounting to P853 per month this year.

For 2019, the budget for the program is proposed to increase to P3.2 billion, the DBM said.

DEPARTMENT OF FINANCE EXCISE TAX
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