DoF awaits DoE nod for fuel tax suspension
‘The Secretary is just waiting for the certification from the Department of Energy that the price of Dubai Crude Oil has exceeded the threshold.’
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‘The Secretary is just waiting for the certification from the Department of Energy that the price of Dubai Crude Oil has exceeded the threshold.’
The Department of Finance (DoF) said it is awaiting certification from the Department of Energy (DoE) that Dubai crude prices have breached the $80-per-barrel threshold for suspending or reducing excise taxes on petroleum products.
“The Secretary is just waiting for the certification from the Department of Energy that the price of Dubai Crude Oil has exceeded the threshold. The SoF [Secretary of Finance] Frederick D. Go is prepared to immediately propose to the DBCC [Development Budget Coordination Committee] the suspension of 100 percent of the excise taxes on LPG (liquefied petroleum gas) and kerosene, for the President’s approval,” the DoF said in a statement on Friday.
Over the past week, crude oil prices have risen above $100 per barrel in international markets amid renewed military action between the United States and Iran. The increase was reflected at local pumps, with kerosene prices rising by P5.58 per liter, gasoline by P4.69 per liter and diesel by P5.18 per liter, according to DoE data released Monday.
Industry sources expect another round of price increases next week as international oil prices remain elevated amid renewed tensions in the Gulf. Gasoline could rise by around P4.50 to P5 per liter by Tuesday, 15 September, while diesel may increase by roughly P2 to P2.50 per liter. The final adjustments will depend on the remaining trading days and the peso-dollar exchange rate.
Republic Act 12316 allows the president, upon the DBCC’s recommendation and in coordination with the energy secretary, to suspend or reduce fuel excise taxes when the average Dubai crude price based on Mean of Platts Singapore reaches or exceeds $80 per barrel during the one-month period immediately preceding the issuance of an order.
The suspension or reduction may cover specific petroleum products and may be implemented fully or partially for no more than three months.
Marcos issued Executive Order 114 in April, suspending excise taxes on several petroleum products for three months following a DBCC recommendation. Dubai crude had reached around $93.71 per barrel amid the Middle East conflict at the time.
Dubai Crude (Platts) closed at approximately $114.91 per barrel on 11 September, down 1.30 percent from the previous session’s $116.42, as oil markets remained volatile.
Following the April suspension of excise taxes on kerosene and LPG, Go said suspending taxes on gasoline and diesel — the two most commonly used fuels among Filipino motorists — would likely not provide “meaningful relief.” Any resulting reduction in pump prices would likely be minimal and largely driven by market conditions.
“[T]he DBCC has determined that suspending excise taxes on diesel and gasoline would not likely provide meaningful relief, as any reduction in retail pump prices would be marginal and largely offset by prevailing market dynamics,” Go added.
The DoF earlier projected around P136 billion in foregone government revenues if all petroleum taxes were suspended, including P43.6 billion from suspending excise taxes on kerosene and LPG.
