Lately, its been rather painful to have my car refueled, what with the ridiculously expensive fuel prices. I drive an SUV, so a full tank of diesel fuel (at 50 liters) would cost a little over P2,400, with the average price of diesel at P48.35 a liter. I could just imagine what the gasoline-driven cars would be paying for a full tank of gas; the current average price for gasoline ranges from P58.35 to P60.35 per liter.
As to what has caused fuel prices to skyrocket, many theories abound. However, one thing is certain, the rise in fuel prices can be mainly attributed to the price of crude oil in the world market, which is currently at more than $80.00 per barrel, and is expected to breach $100 per barrel in the coming months. The Philippines, being a heavy importer of oil, is more vulnerable to price increases, compared to its southeast Asian neighbors. As explained by President Duterte: “Ang Indonesia, may reserve. Malaysia, may reserve. Tayo, wala. So every time magbili tayong gasolina, we use our savings.”
Apart from the rising price of crude oil in the world market, are there other contributing factors to the high prices of fuel in the Philippines? In the news, everyone has been clamoring for the suspension of the excise taxes on fuel products brought about by Republic Act (RA) 10963, or the “Tax Reform for Acceleration and Inclusion” (Train) Law. The first phase of RA 10963, Train 1, provided for new reduced income tax rates for individuals, but at the same time, also imposed new excise taxes on diesel, liquefied petroleum gas, kerosene and bunker fuel, and is widely perceived to be the leading cause of the country’s worsening economic condition. |
Specifically, Revenue Regulations (RR) No. 2-2018, which implements the excise tax provision on fuel under the Train Law, imposes an excise tax of P7 per liter effective Jan. 1, 2018, and will be increased to P9 on Jan. 1, 2019, and P10 in 2020. The excise tax on diesel, on the other hand, is P2.50 for 2018, and will be increased to P4.50 in 2019, and P6 in 2020.
Under RR 2-2018, the scheduled increase in the excise tax on fuel shall be suspended when the average price of
“Dubai crude oil” reaches or exceeds $80.00 per barrel for 3 months prior to the scheduled increase of the month. A separate RR will be issued for this purpose.
It is clear from RR 2-2018 that the executive department, particularly the Department of Finance (DoF), is perfectly capable of suspending the excise tax on fuel, sans legislative fiat. As to which excise taxes for a particular year may be suspended, authorities cannot seem to have a unified position on the matter. For one thing, it is more likely that we cannot expect an immediate suspension, considering that it has only been recently that the average price of “Dubai crude oil” has breached the $80 per barrel mark. Note that RR 2-2018 requires the crude oil price to stay at $80 per barrel for 3 months prior to the scheduled increase.
More importantly, as to how much excise taxes will be suspended, DoF Assistant Secretary Tony Lambino, when sought for a comment on President Duterte’s announcement on the possible suspension of excise taxes, had this to say: “As far as I could tell, I interpreted the statement as being the next increase — which is P2, the 2019 increase in the excise.”
What we have here, according to Lambino, is merely the possible suspension of the additional P2 excise tax which is supposed to take effect on Jan. 1, 2019. In short, I can be assured that the next time I gas-up, I will still probably be shelling out a little over P2,400 (or more, as crude oil prices are still on the rise). With that, can we say that the proposed suspension of excise taxes by the Duterte administration is a band-aid measure, a case of being “too little, too late”? You tell me.
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