Mary Grace Padin (The Philippine
Star) - October 22, 2018 - 12:00am
MANILA, Philippines — Even with
plans to suspend the second tranche of fuel excise tax hike next year, the
Department of Finance (DOF) is not delaying its full implementation by 2020 as
provided for in the tax reform law.
In an interview, Finance
Undersecretary Karl Kendrick Chua said the government will impose the full P6
per liter excise tax on fuel even if the second tranche of increase gets
deferred next year, so long as the prices of Dubai crude oil based on the Mean
of Platts Singapore (MOPS) do not reach $80 per barrel before 2020.
“First of all, a suspension is
temporary and there is already the law that provides the scheduled increase. So
if you suspend for one year, by 2020 you have to apply the full amount. If you
suspend, after one year you have to apply the next increase if the prices do
not go above $80,” Chua said.
The Tax Reform for Acceleration and
Inclusion (TRAIN) law has increased the excise tax on fuel by P2.50 per liter
effective Jan. 1, 2018, P2 per liter on Jan. 1 next year and P1.50 per liter by
2020.
By Jan. 1, 2020, the excise tax on
fuel would increase by P3.50 per liter, for a total of P6 per liter.
The government’s economic team has
recommended the suspension of the increase scheduled in 2019 to anchor the
public’s inflation expectation.
Under TRAIN, the suspension is
possible if the price of Dubai crude averages at least $80 per barrel – based
on MOPS – in three months preceding the next scheduled increase.
But Chua said the government is
still working out the implementing rules and regulations to determine the
conditions for the reinstatement of the suspended hike.
“The resumption is not stated in the
law – that’s what the IRR will clarify when it will be resumed,” Chua said.
He added that the IRR will come in
the form of a Bureau of Internal Revenue regulation.
For his part, Finance Assistance
Secretary Antonio Lambino said the IRR “is in its advanced stage” and will
definitely be released within the year.
According to Chua, the government is
considering two options for the resumption of the excise tax hike – to wait for
one year before the suspension gets lifted; or to impose a rule providing for
reinstatement once Dubai crude oil averages below $80 per barrel for three
months.
“That is what is being discussed as
we prepare the IRR – how to interpret that in the law. Do you wait for one year
or do you apply the three month rule, which is also sensible?” the official
said.
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