DOF says fuel excise tax suspension won’t lower oil prices
Not in defiance against President Rodrigo Duterte’s recent pronouncement that he is considering to suspend the excise taxes on all petroleum products, the Department of Finance said that the suspension would not significantly lower the prices of oil products.
According to Finance Assistant Secretary Tony Lambino, there is a need to look more closely into the potential effect on suspension of fuel excise taxes, as he noted that the additional excise taxes comprise 25 percent of the increase in fuel prices. He said, “The 75 percent will be there whether there is TRAIN or not.”
The DOF earlier on pointed out that the steady rise in global oil prices is the one that affects the oil price hike in the country and not so much the TRAIN law-mandated excise taxes that others are blaming for inflation.
“So I think we also need to manage the expectations in that sense that if Congress decides to create a new suspension mechanism. The oil prices will not really go down because the import price rose from around high $40 per barrel to now above $80 per barrel, and the import price is something, unfortunately, we do not control because we are not an oil producer, and we are the price-taker when it comes to the world market,” he added.
Just the same, the Finance official said they are still looking at all the advice they have received as he took note of what the President said. Finance Chief Carlos Dominguez III is also studying the issue very closely.
“We’ll seek a clarification from Secretary Dominguez as to what the conversation between him and the President is, regarding this matter,” Lambino said.
He further explained that suspending the fuel excise taxes prior to the requirement under the law, the TRAIN law states that it may be suspended if world prices hit $80 a barrel for at least three months but this would still require some sort of legislative action.
“Perhaps, such has been recommended, or maybe other legislative action, because the excise tax rates are already in the law. So if we suspend based on the mechanism that is in the TRAIN law, then that can be automatic. But if we do something else, it would require different actions,” he said.
The Section 5 of Revenue Regulation 2-2018, which provides implementing guidelines for petroleum products under the TRAIN law, states that: “For the period covering 2018 to 2020, the scheduled increase in the excise tax on fuel as imposed shall be suspended when the average Dubai crude based on Mean of Platts Singapore for three months prior to the scheduled increase of the month reaches or exceeds eighty dollars [$80] per barrel.”