Updated Dec 15, 2018, 10:59:00 AM
Metro Manila (CNN Philippines, December 14) — Prices may remain stable despite the additional ₱2 fuel excise tax next year, a central bank official said Friday.
In an interview on CNN Philippines Business Roundup, Bangko Sentral ng Pilipinas (BSP) Deputy General Diwa Guinigundo said the excise tax will have a minimal impact on next year's inflation.
"[It] will contribute just 0.1 percentage point or 10 basis points. The government decided to push through with the implementation of the excise tax precisely because oil prices have decided to come down," Guinigundo said.
He added that if oil prices continue to go down, the fuel excise tax could have a negligible impact on prices.
"And therefore that 0.1 percentage point possible contribution to domestic inflation could be outweighed by the fact that oil prices have started to come down," he said.
President Rodrigo Duterte on December 4 decided to continue with the second round of fuel excise tax increase based on the Tax Reform for Acceleration and Inclusion (TRAIN) law.
READ: Duterte approves second round of fuel excise tax increase
The TRAIN law has a provision that allows for the suspension of the additional excise tax if global oil prices hit an average of $80 per barrel and above within three months before the next increase on January 1, 2019. This condition was not met in 2018.
Guinigundo said Filipinos would benefit from the fuel tax, which would be used to fund the government's infrastructure projects.
"What is more than ₱2 every liter of additional excise tax compared to the convenience that everybody will be benefiting from once all of these public works projects of the government are completed," he said.