Gain from higher fuel costs

entire 2019.

“Assuming the suspension is implemented for the entire year of 2019, its net revenue effect would be around 27-billion loss,” Beltran told reporters in an interview at the DOF headquarters.

Beltran said the gains from VAT will be higher if the Dubai crude price averages more than $80 per barrel next year.

“If the [Dubai price] rate is higher than $80, then there will be additional gains. While the estimated loss from excise tax is fixed because it’s not relative to value,” said Beltran, who is also the DOF’s chief economist.

Meanwhile, Finance Assistant Secretary Antonio Joselito G. Lambino II clarified that the economic managers’ recommendation to suspend the second tranche of increase in fuel taxes will be implemented next year.

“We are anticipating a formal announcement from the OP [Office of the President]. The review [to lift the order] will happen at some point next year after the suspension is implemented,” Lambino said in a mobile phone message sent to reporters. Earlier, Finance Secretary Carlos G. Dominguez III said the government may need to defer some non-infrastructure projects next year once the planned suspension of the higher excise tax on petroleum products is implemented.

Dominguez, however, is optimistic the suspension would not be in place for the entire 2019.

“We will have to cancel some non-infrastructure expenditures,” Dominguez said, citing there are government projects and programs explicitly identified under the TRAIN law as beneficiaries.

“We consider social expenditures part of infrastructure. In fact, 30 percent of all collections under TRAIN goes to social infra expenditures, so if you want to cancel everything we will have to cancel a lot of infrastructure programs,” he added.

Under the TRAIN law, the next 2 increase in fuel tax, which is scheduled on January 1, 2019, will be suspended once the Dubai crude price averages above $80 per barrel in the final three months of this year.

“It’s not canceled, it’s temporarily suspended the increase of 2 per liter. In the first two weeks of October, it is already over $80 and the forward market the future market at the end of the year as of last week was over $80,” Dominguez said.