Fuel tax suspension still ‘policy’ – Diokno

Fuel tax suspension still ‘policy’ – Diokno

‘Once the decision has been made, we should stick to it’

A Cabinet-level recommendation to suspend next year’s fuel tax increases remains up for President Rodrigo Duterte’s approval unless economic managers agree to recall the proposal, Budget Secretary Benjamin Diokno said on Friday.

“That’s the policy unless we change it,” Diokno told reporters at the sidelines of an investment forum in Makati City.

“Once the decision has been made, we should stick to it,” he added.

Government officials earlier this week announced that Malacañang was looking to shelve a second round of fuel taxes to address above-target inflation.

Special Assistant to the President Christopher Lawrence “Bong” Go on Sunday initially said that Duterte had already issued an order but later clarified that it had been proposed, which was confirmed by Socioeconomic Planning Secretary Ernesto Pernia and Finance Secretary Carlos Dominguez 3rd.

The Finance department, however, appeared to have backpedaled on Wednesday when it issued an economic bulletin stating that Dubai crude prices were not at the level needed to invoke a suspension.

Pernia, meanwhile, declared on Thursday that that the proposal needed to be reviewed and possibly recalled.

“Maybe it’s better if we don’t suspend it at all,” he told reporters.

Diokno rejected the call for a review, saying that economic managers were already spending so much time conducting policy evaluations, and urged Malacañang to announce the tax hike’s suspension.

Higher taxes on fuel products were implemented under the Tax Reform of Acceleration and Inclusion (Train) law that took effect at the start of 2018.

Under the law, a second round of fuel tax hikes is scheduled to take effect at the start of next year. It can only be suspended “when the average Dubai crude oil price based on Mean of Platts Singapore (MOPS) for three months prior to the scheduled increase of the month reaches or exceeds $80 per barrel.”

According to the Finance department’s Wednesday bulletin, Dubai crude had dropped to $80.188 per barrel as of October 12 from $82.577/barrel four days earlier, while Dubai crude futures for the next six months had fallen below $80/barrel.

The tax hikes under Train have been blamed for rising inflation, which hit a fresh nine-year high of 6.7 percent in September. Legislators earlier this year called for the suspension of the fuel tax hike as consumers complained of rising prices, a move initially rejected by the Finance department.

While the Finance chief has now expressed support for the suspension, he also warned that this would lead to cuts in non-infrastructure spending. Among those likely to be affected, Dominguez said, are cash transfers to the poor and fuel subsidies for jeepney drivers.