MANILA – Some of the Duterte administration's non-infrastructure expenditures scheduled for 2019 face possible cancellation if the implementation the oil excise tax's second tranch is put on hold due to soaring world crude prices, Finance Secretary Carlos Dominguez III said.
Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, which took effect last January 1, the oil excise tax hike may be suspended next year if the price of oil in the international market averages USD80 per barrel in the last quarter of this year.
In an interview by journalists Monday, Dominguez said global oil prices have risen over to USD80 per barrel in the first have of October.
“So the market is telling us it’s going to be over USD80 dollars so we might as well announce the suspension so that people will not speculate anymore,” he said.
He, however, clarified that any suspension of the oil excise tax increase will be made by the Office of the President (OP), adding that Finance officials, among others, continue to monitor developments.
Economic managers have recommended to President Rodrigo R. Duterte the suspension of the oil excise tax hike next year since global oil prices have touched the USD80 per barrel level and are projected to increase further in coming months.
Dominguez said suspension of the oil excise tax increase next year will result to foregone revenues amounting to some PHP41 billion.
He said this issue will be among the topics that will be discussed during the meeting of the inter-agency Development Budget Coordination Committee (DBCC) on Tuesday.
He added that social expenditures are considered part of the infrastructure spending. He, however, did not indicate what non-infrastructure program might be cancelled.
“In fact, 30 percent of all collections under TRAIN 1 go to social infrastructure expenditures so if you want to cancel everything we will have to cancel a lot of infrastructure programs,” he said.
Dominguez, meanwhile, said value added tax (VAT) collections are expected to go up if pump prices remain on its current direction.
He, however, did not give any estimate as to how much VAT collections will increase due to rising prices of petroleum products. (PNA)
