DOF: Fuel excise tax hike may be suspended for 3 months next year

The Department of Finance (DOF) confirmed on Wednesday that the scheduled increase in the excise tax on fuel may only be suspended for three months next year.

DOF Undersecretary Karl Kendrick Chua revealed this during the joint hearing of the Senate committee on economic affairs, and the committee on ways and means on Wednesday.

At present, Chua said the DOF is still discussing the “parameter” of the government’s recommendation to suspend the next excise tax hike on fuel scheduled in January 2019.

READ: DOF OKs temporary suspension of oil excise tax in Q1 2019 but…

Senator Sherwin Gatchalian, who was presiding over the hearing, first asked if the suspension could still be done this year.

“Well, the recommendation was to suspend the next increase, 2019, the additional P2. However, the excise currently implemented this year remains because we are constrained by the law,” Chua said.

The law, he pointed out, only provides a suspension for the next increase.

Chua also believes there is no need for Congress to pass a new law to suspend the additional tax next year, citing the automatic suspension provided under the existing law.

A provision in the Tax Reform for Acceleration and Inclusion (TRAIN) Act provides that the scheduled increase in the excise tax on fuel should be suspended “when the average Dubai crude oil price based on Mean of Platts Singapore for three months prior to the scheduled increase of the month reaches or exceeds $80 per barrel.”

“The Secretary has opined if the suspension is based on three months, then the resumption could also probably be based on a three-month cycle,” Chua said when Gatchalian asked how long the suspension would.

“But that’s his opinion and we’re still reviewing and discussing,” Chua added, apparently referring to DOF Secretary Carlos Dominguez III.

“So were looking at, at the very least three months suspension?”  the senator asked again.

“Yes, at the very least and we will base that on the prevailing oil price,” Chua said.

Chua also explained that while the law is clear when to suspend the additional tax, it was “less clear on when we can resume.”

And even if the trigger price of $80 per barrel is not met in December, Chua said the government will still push through with the planned suspension in January next year.

“Well the economic managers have recommended already the suspension and if it goes lower, the Secretary has indicated that we can review it early next year but the recommendation to suspend stands,” Chua said.

To which Gatchalian commented, “So parang Christmas bonus yun…”  /muf