DESPITE the soaring oil prices, the Department of Finance (DOF) said Monday, May 28, that the additional excise tax imposed on petroleum products can only be suspended in 2019.
"The provision of the law is very specific also -- that when the Dubai crude oil hits United States' $80 per barrel at an average, it will be the next tranche in 2019 that we will suspend," said DOF Assistant Secretary Paola Alvarez.
Alvarez was referring to the provision in Tax Reform for Acceleration and Inclusion (Train) Act that allows the suspension of the excise tax on fuel once world oil prices reach a certain level.
Alvarez said the government could not afford to suspend the additional excise tax on fuel now because this will adversely impact on government-funded projects.
"It's also hard for us to suspend mid-year because you have already projected in your appropriations, in your revenues and in your budget those things that you will fund. And your budget allocations are also set in place," Alvarez said in an interview with Palace reporters.
"The crucial thing here is we cannot just suspend it because funding for several projects, such as the free tuition in state universities and the proposed increase in the salary of our personnel and teachers. It will be difficult for us to fund all those," she added.
Under the Train Law inked by President Rodrigo Duterte in December 2017, the excise tax on liquefied petroleum gas (LPG), diesel, gasoline, and kerosene went up by P1, P2.50, P7 and P3, respectively, and will go up further by P2, P4.50, P9, and P4, respectively, in 2019.
Several lawmakers have called on the suspension of the collection of higher excise tax on fuel products as world oil prices continued to rise.
The price of crude oil in the world market is nearing $80 per barrel, while the inflation rate hit 4.5 percent in April.
The Finance official also explained that the first tax reform package pushed by the Duterte administration was not the sole contributor to the increasing inflation rate, noting that the Train Act's impact on the over-all inflation rate is merely 0.4 percentage points.
She said the top 10 commodities that have a strong impact on inflation are "fish; operation of personal transport equipment; rice; electricity, gas, and other fuels; meat; catering services; actual rentals for housing; non-alcoholic beverages; tobacco; and vegetables."
"When you look at inflation, it's not all about Train," Alvarez said. "What we have is Train only gave an impact of 0.4 percentage points to the over-all inflation rate. And it is not only Train that is contributing to inflation.” (SunStar Philippines)