Philippines' Development Budget Coordination Committee, or DBCC plans to recommend the reinstatement of the excise fuel tax on refined products, which will take effect January 1, 2019, after President Rodrigo Duterte formally approved the suspension in the middle of November, as Brent crude oil prices fall below $60/b, local media reported on Thursday.
"The recommendation comes in light of the favorable outlook in world oil prices, where Dubai crude oil prices have gone down by 14% from an average of $79/b in October down to $68/b so far in November," finance secretary Carlos G. Dominguez III was quoted as saying by local media Philstar. "More so, the oil futures market projects the price of oil to decline further to below $60/b in 2019, indicating a downward trend in world oil prices."
On Wednesday, front-month ICE January Brent crude oil futures settled at a 13-month low of $58.76/b. The last time the front-month contract was any lower was on October 25, 2017, at $58.44/b, S&P Platts Global data showed.
The recommendation by the DBCC to continue with excise fuel tax on refined oil products will be discussed on December 4 with the president in Cabinet.
The law was signed by Duterte on December 19, 2017, and came into effect in January 2018. The excise tax on fuel was raised by Philippine Peso 2.50/liter (5 cents/liter) in 2018, and was expected to rise by Peso 2/liter in 2019, followed by another Peso 1/liter in 2020.
The suspension of the tax hike next year would mean a loss of as much as Peso 43.4 billion in revenue for the government, according to the finance secretary.
Under the Train law, the government can suspend the tax hike if the three-month average of Platts Dubai crude oil reaches $80/b.
For October, the annual inflation rate in the Philippines stood at a nine-and-a-half year high of 6.7%, steady from the previous month, data from the Philippine Statistics Authority showed.
