Philippines will halt the second round of excise fuel tax on refined products, which was due to come into effect January 1, 2019 after President Duterte formally approved the suspension, in a bid to grapple with high inflation, local media reported on Thursday.
"The President has formally approved the suspension of the next round of excise tax increase on oil products under the Tax Reform for Acceleration and Inclusion (TRAIN) law," Manila Bulletin reported on Thursday.
The law was signed by President Duterte on December 19, 2017, and came into effect on January, 2018. The excise tax on fuel was raised by Philippine Peso 2.50/liter in 2018, and was expected to rise to Peso 2.00/liter in 2019, followed by another Peso $1.00/liter in 2020.
"The latest tax relief measure was upon the recommendation of the President's economic team led by Finance Secretary Carlos Dominguez," Manila Bulletin reported.
According to the report, the suspension of the tax hike next year, meant that the government coffers would lose Peso 40 billion in revenues.
Under the Train law, the Philippines government can suspend the tax hike, if the three-month average price of S&P Global Platts Dubai crude oil price reaches $80/barrel.
High crude prices before the recent slump in November, and the excise tax earlier this year, have been described as key causes for the country's rising inflation level.
For October, annual inflation rate in the Philippines stood at a nine and half year high of 6.7%, steady from the previous month, according to data from the Philippine Statistics Authority.
To combat rising inflation in the transport sector, the government looked into various methods, such as the consumption of Euro 2 compliant automotive diesel oil.
Since January 2016, and under the country's Clean Air Act of 1999, oil firms are required to sell fuels that adhere to at least Euro 4 specifications. Euro 4 standards for both diesel and gasoline cap maximum sulfur level at 50 ppm while Euro 2 standards for both diesel and gasoline cap maximum sulfur level at 500 ppm.
The government through the Philippine National Oil Company-Exploration Corporation, or PNOC-EC, was also tasked to source for low-priced 50 ppm sulfur gasoil for imports to the country.
