Philippine President Rodrigo Duterte may be the real-life personification of ‘Judge Dredd’ to many due to his deadly war on drugs, but his backflip on a fuel excise increase has many others labelling him as the embodiment of Ebenezer Scrooge.
Now due to come into effect on January 1, the festive season dampener will see the excise on diesel and gasoline rise by PHP2 (about US$0.04) per litre as part of the second phase of the Tax Reform For Acceleration and Inclusion (Train) law.
On January 1 this year gasoline prices increased PHP2.65 ($0.05) per litre, while a new PHP2.50 per litre excise was applied to diesel fuel with the introduction of the Train law. A further PHP1.50 ($0.03) per litre increase is scheduled for January 1, 2020.
With galloping inflation easing only slightly last month to 6 per cent, President Duterte had been under intense pressure to suspend the scheduled hike and early last month Malacañang Palace said it would temporarily suspend the second fuel excise hike in an effort to curtail soaring commodity prices.
By the end of the month President Duterte’s economic managers were recommending the suspension be lifted and on December 4 he gave the go-ahead for the fuel excise hike to proceed, in the process throwing a dampener on the festive season plans of millions of people who travel over the festive period.
Gas to be cheaper despite fuel excise hike
Defending the increase, Budget Secretary Benjamin Diokno said last week that the price of fuel will actually be cheaper under the tax than it has been in the recent past.
“At its peak, diesel price was PHP49.80 ($0.94) per litre. It will be PHP37.76 ($0.72) in January ‘19, inclusive of the PHP2 peso ($0.04) excise tax”, Mr Diokno said.
This achievement, he said, was due to the falling price of crude oil. From a peak of close to $80 (per barrel) the price of crude oil on November 29 was $68 per barrel.
He confidently added that “the Dubai Futures prices projection is for further declines below $60 per barrel in 2019”.
Further defending the backflip, a statement issued by presidential spokesperson Salvador Panelo said consideration had been given to the disruption in the BBB (‘Build Build Build’) infrastructure programme and reduction in national government agencies’ budgets should the tax be suspended.
Under the Train law “suspension of excise taxes is provided for only when the global price of oil averages $80 per barrel or higher for three consecutive months”, Mr Panelo said.
Following the introduction of the Train law earlier this year Filipinos have been grappling with rocketing consumer goods prices.
With little to no relief in sight many describe the tax reform as ‘anti-poor’. Severe shortages along with galloping inflation combining to multiply the cost of staples such as rice.
Train worsens inequality
That the average Filipino is worse off uder rain is not just myth. Research group IBON Foundation said the Train tax had worsened inequity in the Philippines.
In a CNN Philippines report IBON executive director Sonny Africa said, “the poor and middle class, even those few with gains from personal income tax cuts, will suffer cuts in their standard of living unlike the rich who will easily be able to maintain their lifestyles.
Claiming “sustainable long-term gains can only come from fearless collection of higher direct taxes on income, wealth, and property taxes on the rich”, Mr Africa said through its flagship Train reforms, the Duterte administration is taking huge steps to make the country’s tax system even more regressive, pro-rich, and anti-poor.
The Department of Finance (DOF) is meanwhile standing firm, refuting claims the fuel excise increase is ‘anti poor’.
Citing a Family Income and Expenditure Survey (FIES) from 2015 the DOF said 51 per cent of total fuel consumption in the Philippines was by households in the richest 10 per cent.
The top one per cent of richest households, it said, consumed 13 per cent of the nations fuel, equivalent to the aggregate consumption of the bottom 50 per cent of households. The excise tax increase will, the DOF said, affect the rich more than the poor given their more sizeable oil consumption.
Feature video ABS-CBN News
Feature photo paulbr75
- Duterte approves 2nd round of fuel excise tax hike in 2019 (Inquirer.net)
- Duterte approves proposal to proceed with fuel tax hike in 2019 (GMA News)
- Cabinet to meet on withdrawal of recommendation to suspend fuel excise tax (CNN Philippines)
Between November 2010 and February 2012 she was a staff writer at Daylight Online, Nigeria writing on health, fashion, and relationships. Since 2010 she has worked as a freelance screen writer for ‘Nollywood’, Nigeria.