LOCAL business leaders in Cebu welcomed the government’s pronouncement that it will be putting on hold the additional excise tax to be levied on fuel products starting January 2019.
The move, according to businessmen, will not only help the business community but the general public as well.
Mandaue Chamber of Commerce and Industry (MCCI) President Stanley GO said fuel is one product that affects across different industries.
“This move to delay the implementation (of additional excise tax) will help in tempering inflation this year. Fuel is a universal raw material that affects multiple businesses,” he said.
However, Go said that while the move would be a step in the right direction, it would also be important to note that inflation had been caused by several other factors including world market prices, supply and demand, and the peso exchange rate among others.
But still, this is a welcome development.
From sources or manufacturers to end users or consumers, Go said fuel had always played an important role especially in terms of logistics and transportation.
“There are a lot of factors beyond our control. But there are things that are within the control of the government. In terms of policies, this is a welcome move especially since we’re moving to the last quarter of the year where consumer spending is high,” he added.
President Rodrigo Duterte has reportedly decided to suspend the second round of higher excise tax on fuel as mandated by the Tax Reform for Acceleration and Inclusion (Train) law.
The move is meant to help temper the country’s soaring inflation.
In a statement last Sunday, Finance Secretary Carlos Dominguez III said the additional P2 per liter excise tax for fuel products would be put on hold.
It is originally scheduled to take effect starting January 1, 2019 under the Train law.
The increase would have brought the total excise tax on gasoline to P9 per liter from P7 per liter this year; and P4.50 per liter for diesel from the P2.50 per liter this year.
Cebu Business Club President Gordon Alan Joseph said the decision was expected and inevitable given the continued record high inflation rates in the past months.
In September, inflation reached 6.7 percent, the highest in more than nine years.
“There was no choice and I am glad he (President Duterte) did this,” he said.
Joseph added that it still remained to be seen how efficiently the additional taxes received by the government from the implementation of the Train law were used.
He said that the additional revenues were not well programmed and had mostly went to the salary and pension increases of the military instead of for infrastructure spending and government services.
He said that the net effect of this move was that it hurt the economy.
“We need careful economic and spending planning or else we may begin an economic downward spiral,” Joseph said.
MCCI Vice President for External Affairs Steven Yu also believes that the President made the right decision to suspend the scheduled increase in fuel excise tax.
“This will help alleviate the plight of the business sector and the consumers in general. It will go a long way and let us hope that the plan to flood the supply of other essential commodities will materialize,” he said.
He added that this move would help stabilize the inflation in a major way.
To recall, for the past two months, oil companies have been implementing fuel rate hikes every week. Last week, however, they implemented small rollbacks.
According to Dominguez, the President came up with the decision to suspend the implementation of additional excise tax on fuel after consulting with the Senate and the House of Representatives as well as his economic team.