Metro Manila (CNN Philippines, October 19) — Government expects to lift the suspension of the next tranche of fuel excise tax increase halfway into the 2019, National Economic and Development Authority (NEDA) Secretary Ernesto Pernia said.
"That suspension will take place the whole year, 2019, but we expect to, you know, resume or we expect to lift the suspension by the second half of the year," Pernia told CNN Philippines' Business Roundup Friday.
He did not elaborate but was apparently voicing expectation that crude oil prices will go down. Under the law, the increase can be suspended if the three-month average price of Dubai crude reaches at least $80 per barrel.
President Rodrigo Duterte is expected to issue the order to preempt the effects of increasing international oil prices in the local market, according to Finance Chief Sonny Dominguez on October 14.
"In the meantime, because of the higher price of oil, we are also getting an increase in VAT (Valued Added Tax) collections, because higher price means more VAT collections," Pernia added.
The revenues collected is slated to offset the losses incurred by the suspension, which would amount to around P41 billion.
Pernia adds, "Because of the depreciation of the peso, we are also gaining more, in peso terms, when we pay more for higher prices of oil and other imports. So that will amount to 31 to 35 U.S. dollars."
The economic managers also forecast on Thursday a weaker local currency, with the peso-dollar exchange rate projections from a range of P50-P53 pesos against a dollar for 2018, to a smaller range of P52.50 - P53.
The Tax Reform Acceleration and Inclusion (TRAIN) Law went into effect last January. The law increases the excise tax imposed on oil products from 2018 to 2020. For 2019, the excise tax on fuel products will go up by another ₱2 per liter beginning January.
De Guzman, C. (October 26, 2018). NEDA chief: Oil excise tax suspension may be lifted midway into 2019. CNN Philippines. Retrieved from http://cnnphilippines.com/news/2018/10/19/oil-excise-tax-suspension-lifted-2019.html