No fuel price hike under tax reform law until mid-January

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Metro Manila (CNN Philippines, January 3) — The Energy Department on Wednesday reminded the oil industry and the public that higher fuel taxes should only take effect after January 15.

Energy Assistant Secretary Bodie Pulido said they expect stable fuel prices in the next 15 days.

"One, we have an Executive Order 134 that requires a minimum inventory for liquid petroleum products for 15 days. Two, based on the data in the possession of the Department of Energy and based on the projections we made on the data made available to us we believe that the existing old stocks would take at least 15 days before it is exhausted," Pulido said.

After 15 days, new stocks will be sold at the pump where gasoline prices will be higher by ₱2.97 per liter. This means from the current average price of ₱47.15 per liter, the price will be ₱50.12 per liter.

Diesel will cost ₱2.80 more, so the average price of ₱37.39 per liter will be ₱40.19.

Kerosene will cost ₱3.36 more, raising the average price of ₱42.50 to ₱45.86.

The excise tax plus 12 percent VAT of ₱12.32 per 11-kilogram tank of LPG or cooking gas should take effect after at least seven days from January 1st.

The current average price of ₱550 for an LPG tank will be adjusted to ₱562.32.

Presidential Spokesperson Harry Roque also said fuel prices should not be affected by the tax reform law just yet as existing inventories were not slapped new taxes.

"As repeatedly mentioned by the Department of Finance and the Department of Trade and Industry, the imposition of excise taxes should not affect current prices now," he said in a separate media briefing.

Energy officials also warned oil companies they are strictly monitoring and doing random checks on all oil prices in the market to pinpoint those taking advantage of the new law. They could be charged with unreasonable pricing and estafa.

"As directed by President Duterte, the government taxes should not profit the companies, because these are all intended for the services of the government to the public and the public alone," Energy Secretary Alfonso Cusi said.

Authorities are requiring retailers to submit inventories and documents for close monitoring of fuel stocks.

The tax adjustments will only be the first tranche as the Tax Reform for Acceleration and Inclusion (TRAIN) or the new tax reform law recently signed by President Rodrigo Duterte will have two more tranches. In other words, more increases will happen in 2019 and 2020.

While energy officials say oil industry players agree on the effectivity of the excise tax at the pump, pump prices will also be influenced by world market prices that move on a weekly basis.

The price adjustment on January 1 was due to changes in the world market.

"Every Tuesday ang price movement. 'Yun ay due to factors of supply and demand," said Energy Undersecretary Wimpy Fuentebella.

CNN Philippines' Correspondent Cecille Lardizabal contributed to this report.