Gov’t move to proceed with fuel tax hike backed

The Philippine Chamber of Commerce and Industry (PCCI) backtracked its call to suspend the increase of fuel excise tax next year, supporting instead the government’s decision to push through with the hike.

PCCI president Alegria Sibal-Limjoco said on Monday that the increase should go as scheduled under the the Tax Reform for Acceleration and Inclusion (TRAIN) Act given that oil prices have now gone down.

“While PCCI championed TRAIN, it was among the first organizations to call for the suspension of the excise tax on oil because of the unrelenting increase in the global price of fuel,” she said.

“But with the reversal of the situation, where oil prices have gone down, even lower than the level when the excise taxes were imposed, there is no more reason to suspend the next round of excise tax,” she added.

The government has previously suspended the scheduled increase for the first three months of next year after anticipating that global oil prices would continue to rise.

However, the changes in the global market have prompted economic managers to recommend that the increase be imposed as planned, a recommendation that Malacañang supported.

While the TRAIN law lowered the personal income tax of millions of Filipinos, it increased consumption taxes such as on fuel, a case of bad timing amid developments in the global market.

Under the law, fuel excise and value-added taxes will keep increasing as scheduled starting 2018 until 2020, despite the protests of labor groups and some lawmakers who have called the policy anti-poor.

The Department of Energy is also backing a move by the government’s economic managers to push ahead with increased fuel taxes in January, saying global prices are expected to further go down in the next few months.

“We made our forecast for oil [prices], what would be the price next year, and our forecast supports the recommendation of the [economic team] to reinstate the second tranche of excise tax on oil products,” Energy Secretary Alfonso Cusi said in an interview.

“We are seeing Dubai crude oil at around the low end of the $50- to $60-per-barrel range in the coming months,” Cusi told reporters.

He said the DOE has already submitted to Malacañang its position about increasing the tax on fuels, adding that funds that would be raised from the levy were needed to support the government’s infrastructure program.

The TRAIN law added P2.97 in taxes (P2.65 a liter of gasoline plus 32 centavos in value-added tax) to gasoline prices last Jan. 1.

For the second tranche, the TRAIN law imposes an additional P2.24 a liter for both diesel and gasoline—P2 excise plus 24 centavos VAT.

Also, Cusi welcome the decision of Qatar to withdraw its membership in the Organization of Petroleum Exporting Countries (Opec), saying this might help sustain the downtrend in international prices.

“Qatar will be acting more independently. Hopefully that would increase their production and increase supply in the world market and result in lower prices,” Cusi said.

He said world supply was currently estimated at 100 million barrels per day (mbpd) and demand was pegged at 98 mbpd to 99 mbpd.

The United States is expected to increase production, and if the US can cover for the expected reduction from Saudi Arabia and Russia, then we’re OK,” he said.

Even then, while Qatar is the top exporter of liquefied natural gas, the Middle Eastern country is not a big producer of oil.

Opec is also downplaying Qatar’s move, saying there are more producers wanting to join the group and that it is working with non-Opec members to rebalance global supply and demand.

“In the past three years, Opec has seen Gabon rejoin the organization (in 2016) and welcomed new members—Equatorial Guinea (in 2017) and the Republic of the Congo (in 2018),” the Vienna-based group said in a statement.

“Opec appreciates the continued interest of producers wanting to join the organization,” the group added.

Opec said it would carry on with efforts to achieve and sustain balance and stability in the market, through the organization itself, as well as with the 2016 “Declaration of Cooperation” struck with 10 non-Opec countries in order to reduce global output.