A focused action, such as extending aid to the transportation sector, will be more successful in addressing the impact of high local pump prices than deferring the implementation of fuel excise tax, according to a Bangko Sentral ng Pilipinas (BSP) official.
His latest statement was in response to the calls of the Department of Energy to suspend the petroleum excise tax in order to bring down stubbornly high local pump prices.
“Although there’s no official stance on this, I’ll just note that cutting excise taxes will have an impact on the fiscal position. So that’s one big consideration. But the benefit will accrue both to the poor and also to the wealthy,” Dakila added.
The Department of Finance said the government could lose P131.4 billion in revenue next year if the fuel excise tax is not implemented.
The estimated revenue loss was based on the Bureau of Customs’ (BoC) projected total excise tax receipts from petroleum products under the national government’s assumptions in the Budget of Expenditures and Sources of Financing.
The BoC is expected to raise P24.7 billion in baseline excise taxes and P106.7 billion in incremental excise revenues under the Tax Reform for Acceleration and Inclusion law.
In its latest inflation report, the central bank said the average price of Dubai crude oil climbed in the third quarter of this year compared to the previous quarter. Oil prices rose in July as investors bet on a resurgence in demand, mainly in the United States and Europe, as well as continuing draws on global oil inventories.
Oil prices, on the other hand, reversed course in August, falling on concerns about the demand forecast as a result of the return of Covid-19 cases and increased crude oil production from the Organization of Petroleum Exporting Countries and its allies (OPEC+). Following production difficulties in the Gulf of Mexico caused by Hurricane “Ida” in late August, prices increased again in September, it added.
“The outlook for the global energy industry remains highly uncertain given developments relating to the pandemic although market structure appears to still be in backwardation in September 2021. This is consistent with projections from the US Energy Information Administration, which showed that consumption is expected to outstrip supply in 2021,” the Bangko Sentral said.
However, it noted that in 2022, supply will eventually outstrip declining consumption due to projections of higher growth in output from OPEC+, US tight oil production and other non-OPEC producers.
On a year to date basis, price changes in domestic petroleum products as of September 28 this year showed a net price growth compared to end-2020 levels in the domestic market. The central bank stated that gasoline, kerosene and diesel prices in Metro Manila were raised upwardly by P7.40 per liter, P10.65 per liter and P8.42 per liter, respectively.Internet Explorer Channel Network