Budget chief: 2nd tranche of fuel excise tax will not affect 2019 inflation targets

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Budget Secretary Benjamin Diokno. (FILE PHOTO)

Metro Manila (CNN Philippines, December 5) — Budget Secretary Benjamin Diokno said the second tranche of the fuel excise tax increase will not prompt economic managers to revise the Philippines' inflation targets for 2019.

"As you know the BSP (Bangko Sentral ng Pilipinas) is a member of the DBCC (Development Budget Coordination Committee) and in fact before we proposed this we asked them the impact on inflation. And they are very optimistic that this will not change their forecast," Diokno said Wednesday.

Economic managers have earlier revised upwards inflation targets to a range 4.8 to 5.2 percent in 2018, and a 3 to 4 percent range in 2019.

Diokno said that even with the ₱2 excise tax hike scheduled next year, pump prices will be still lower by ₱10 to ₱12.

The DBCC reversed an earlier recommendation to suspend the additional taxes under the Tax Reform Acceleration and Inclusion (TRAIN) law, after prices of Dubai crude oil went down by 14 percent to an average of $68 per barrel in November from $79 per barrel in October.

President Rodrigo Duterte approved the DBCC's recommendation Tuesday.

Diokno also reiterated that Dubai crude prices will hit only $60 per barrel in 2019, lower than the $80 three-month average threshold set by TRAIN before the suspension can take effect.

Senators decry approval of excise tax

The President's support for his economic manager's proposal did not sit well with some senators.

"Pinakinggan sana ang taumbayan at hindi na gatungan ng buwis sa petrolyo ng TRAIN Law, habang alam naman ng lahat na ang pag-akyat nito ang dahilan sa mataas na presyo sa merkado," opposition Senator Bam Aquino said in a statement.

[Translation: They should have listened to the public and not impose additional taxes on petroleum products under the TRAIN law, as everyone knows it is the higher prices of these products that cause the upticks in the market.]

Senator JV Ejercito called on the economic managers to be more sensitive to the public.

Akbayan Senator Risa Hontiveros said that despite oil price rollbacks, the peso cost of petroleum products remain high.

"President Duterte claimed that we are powerless to respond to the impact of the rise of oil prices in the world market. He also said that we are at the mercy of the international oil market. Then why lift the suspension on the fuel excise tax collection, one of the few safety nets that protect the public from the volatility of the international oil market?" Hontiveros asked.

Senator Sonny Angara on Wednesday said government should fasttrack the release of the unconditional cash transfer and the fuel subsidy to soften the blow of the second tranche of additional fuel excise taxes on the public.

The law provides for increased unconditional cash transfers to low-income earners amounting to P2,400 for 2018 and ₱3,600 for 2019 and 2020, while the Pantawid Pasada entitles qualified franchise holders of public utility jeepneys to fuel vouchers.

"The 10 million beneficiaries have not all been given the unconditional cash transfer. That's to help the poorest of the poor na saluhin 'yung pagtaas ng presyo. There are 2 million beneficiaries who have not received that yet this year," Angara said.

On the Pantawid Pasada, Angara said that only 37 percent of the 160,000 jeepney franchise holders have been given fuel subsidy.