Fuel tax deferral means substantial 2020 increase
Consumers should brace for a substantial fuel tax hike in 2020 should the government shelve increases set to take effect next year, a senior Finance department official warned.
“The suspension is temporary and there is already the law that provides the scheduled increase,” Finance Undersecretary Karl Kendrick Chua told reporters.
“So if you suspend for one year, by 2020 you have to apply the full amount,” he added.
Economic managers have recommended that President Rodrigo Duterte order the deferment of a second round of fuel tax hikes next year given rising inflation.
Higher taxes on fuel products, among other goods and services, were implemented under the Tax Reform of Acceleration and Inclusion (Train) law that took effect at the start of 2018.
Under the law, a second and third round of fuel tax hikes should be implemented at the start of next year and in 2020.
Following a P2.50 increase this year, the excise tax on diesel will increase to P4.50 per liter in 2019 and by P6 per liter in 2020.
The excise tax on gasoline, meanwhile, will increase to P9 per liter and P10 per liter by 2019 and 2020, respectively, after having been raised by P7 this year.
“In the law, it does not say additional, it says that at this time — this is the amount and by that time it is the full amount already,” Chua said.
“So if you suspend in 2019, you have to implement both [the] 2019 and 2020 increase,” he added.
Deferment of next year’s tax hike appeared a given early last week as a Palace official announced the move, which economic managers confirmed.
Statements issued later in the week, however, caused confusion as one official said the recommendation should be recalled and the Finance department noted that crude prices were not at levels that would prompt the suspension.
The tax hikes under Train law have been blamed for rising inflation, which hit a fresh nine-year high of 6.7 percent in September.
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