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In light of the recent decline in world oil prices, the economic team decided Thursday to recommend to President Rodrigo Duterte to continue with the second installment of the excise tax on oil. , in accordance with the Tax Reform Act for Acceleration and Inclusion (TRAIN).
But it will ultimately be up to the president, who issued a note this month endorsing the previous recommendation of the economic directors to temporarily suspend the tax, to decide the matter when the government meets on December 4, said the finance secretary. Carlos G. Dominguez III. a press conference.
Following the meeting of the Cabinet-level Inter-Agency Development Budget Coordination Committee (DBCC), Dominguez said: "This recommendation is set against the backdrop of the favorable outlook for world oil prices, where Crude oil prices in Dubai were down 14% from the average. from $ 79 a barrel in October to $ 68 a barrel in November. Moreover, the oil futures market predicts that the price of oil will fall further to below $ 60 per barrel in 2019, indicating a downward trend in world oil prices.
"The DBCC also took into account the adverse impact on revenues and expenses for the 2019 fiscal year if the government decided to suspend the planned increase in excise taxes on oil. According to estimates, this measure would result in a loss of £ 43.4 billion in net revenue for a 12-month suspension, assuming that crude oil prices in Dubai average $ 65 per barrel in 2019. erosion of revenues will result in a corresponding decrease in public spending. to not exceed the deficit target of 3.2% of gross domestic product (GDP) in 2019, "said the chief financial officer.
"In parallel with other measures to increase food availability in the country, especially rice, the suspension of the second tranche of excise taxes on oil was aimed at reducing inflationary pressures and releasing the Philippine people high prices of goods. With moderate monthly inflation due to government-initiated supply-side reforms, coupled with falling oil prices in the global market, the DBCC believes that suspension is not necessary ", he added.
The DBCC expects crude oil prices in Dubai to fall to 60-75 dollars a barrel next year, down from the previous assumption of 75-85 dollars a barrel .
Budget Secretary Benjamin E. Diokno said that according to the calculation of the Bangko Sentral ng Pilipinas (BSP), inflation would be in the target range of 2 to 4% the year next, even with the second installment of excise taxes on oil.
Under the Train Act, an excise tax of 2,250 crowns per liter has been applied on diesel and bunker fuel as of this year. This would rise to P4.50 in 2019 and P6 in 2020.
The excise tax on gasoline has also increased from 4.35 pesetas per liter to 7 pesetas in 2018, then to 9 cents next year and 10 pesos in 2020. / kga
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