Oil tax hike to avert gov’t cost-cutting

The government would no longer be hard-pressed on spending and cut on expenses as the recent drop in oil prices allows it to push through with the mandated increase in the excise tax next year, the head of the Duterte administration’s economic team said.

“There will be less urgency to cut costs, but it’s always good to be prepared to prioritize expenditures in case revenue targets are not met,” Finance Secretary Carlos G. Dominguez III said in a text message last Saturday.

Last week, the Cabinet-level interagency Development Budget Coordination Committee (DBCC) decided to recommend to President Duterte to implement the scheduled increase in oil excise taxes for 2019 even as the economic team earlier pushed for a temporary suspension when global crude prices skyrocketed a couple of months back.

The President is expected to make his decision on this when the Cabinet meets on Tuesday, Dec. 4.

In November, Dominguez issued Department Order No. 56-2018, which directed the heads of all Department of Finance offices and attached agencies to “prioritize expenditures and cut down spending for 2019.”

Dominguez said there was then “a need for government to identify measures to augment the estimated P40-billion revenue loss while ensuring the continued delivery of projects, programs and services” if the second tranche of fuel excise tax hike would be suspended in the first quarter of 2019.

Under DO 56-2018, the DOF recommended deferring motor vehicle purchases; foreign travels of personnel (except those already approved by the Office of the President, or sponsored scholarships and training); attendance to private sector-led conferences that charge fees; cultural and social celebrations (except milestone anniversaries), as well as construction of new offices.

The DOF also enjoined its agencies to defer projects that encountered implementation issues and incurred significant cost overruns.