Fuel excise tax increases under TRAIN law

The Tax Reform for Acceleration and Inclusion (TRAIN) law, passed in 2017, has reduced personal income taxes but at the same time increased or imposed new excise taxes on several products —including petroleum products, to raise revenues for the administration's programs.

Prior to the TRAIN law, gasoline has an excise tax of P4.35 per liter while diesel and kerosene have zero excise tax.

As the law gets passed in 2017, the first tranche of excise tax increase in fuel products has increased the duties on gasoline to P7 per liter and imposed a P2.50 per liter levy on diesel and kerosene, which took effect January 1, 2018.

The second tranche of the fuel levy hike —which began January 1, 2019 —has added another P2 on the duties on gasoline and diesel and P1 to kerosene, increasing excise taxes on gasoline to P9 per liter, diesel to P4.50 per liter, and kerosene to P4.00 per liter.

For the third and final tranche, which took effect January 1, 2020, additional excise taxes are smaller P1.00 for gasoline, P1.50 for diesel, and P1.00 for kerosene.

The three rounds of hikes in the fuel excise taxes has increased the levy on gasoline to P10.00 per liter, diesel to P6.00 per liter, and kerosene to P5.00 per liter.

The excise tax adjustments imposed under the TRAIN law are need to fund the government's National Development Program, according to the Department of Finance.

The Department of Energy-in-charge of monitoring the compliance of oil companies in imposing the new fuel levies —has stated that new round of tax adjustments are only applicable to new stocks imported beginning January 1, 2020 and that old stocks should be depleted before the new price schemes reflecting the new duties will be implemented.

The implementation of the increase in fuel excise taxes could be temporarily suspended should the average price of Dubai crude reach or exceed $80 per barrel for three months prior to the scheduled hike. —LBG, GMA News