New excise tax rates take effect; no impact on pump prices yet

Updated: Jan 23, 2021



Photo grabbed from commons.wikimedia.org

The second round of increases in excise tax rates on petroleum products took effect on January 1, 2019, as provided for in the Duterte administration’s first tax reform law.


Despite the increase, the country’s economic managers assured in a joint statement issued Friday, January 4, 2019, that domestic pump prices should remain stable since old fuel inventories are not covered by the new rates.


The economic managers are the director general of the National Economic and Development Authority and the secretaries of the Department of Finance and Department of Budget and Management.


They said the Department of Energy is closely monitoring pump prices “to ensure that the new excise tax on oil is not yet reflected in the prices at the start of the year, as old fuel inventories are not subjected to the tax increase.”


However, they urged concerned government agencies to fast-track the implementation of mitigating measures scheduled this year under the TRAIN Law, such as the unconditional cash transfer and fuel vouchers.


“These could fend off possible second-round effects, which may arise from further demand for wage and fare increases,” they said, referring to second-round effects of inflation.


The country’s headline inflation slowed down to 5.1% in December 2018, bringing the full-year 2018 average to 5.2%. In Central Visayas, the headline inflation rate was reported at 5.3% in December, lower than 6.0% in November.


Read: Central Visayas slows down to 5.3% in December 2018


The decrease in the national inflation rate, from 6.0% in November 2018 and 6.7% in September and October 2018, was attributed to the “decisive actions” that the government took to rein in prices of goods as an effect, partly, of the Tax Reform for Acceleration and Inclusion (TRAIN) Act.


Under the TRAIN Act, or Republic Act 10963, excise taxes on petroleum products will continue to increase until 2020 to offset the higher cap on non-taxable personal income.


Under Bureau of Internal Revenue (BIR) Revenue Regulations 2-2018, which provides the implementing guidelines on petroleum products under TRAIN:


The excise tax rate on the following products increased by P1 to P9 effective January 1, 2019.

(a) Lubricating oils and greases. including but not limited to, base stock for lube oils and greases, high vacuum distillates. aromatic extracts and other similar preparations, and additives for lubricating oils and greases, whether such additives are petroleum based or not, per liter and kilogram respectively, of volume capacity or weight;

(b) Locally produced or imported oils previously taxed but reprocessed, re-refined, recycled, per liter and kilogram of volume capacity or weight;

(c) Processed gas, per liter of volume capacity; (d) Waxes and petroleum per kilogram; (e) Denatured alcohol to be used for motive power, per liter or volurne capacity; and (e) Asphalts, per kilogram.

The excise tax rate on the following increased by P2 to P9 on January 1, 2019.

(a) Naphtha, regular gasoline, and other similar products of distillation. per liter of volume capacity; and (b) Unleaded premium gasoline, per liter of volume capacity.

The excise tax rate on kerosene increased by P1 to P4 per liter on January 1, 2019.


The excise tax rate on the following increased by P2 to P4.50 effective January 1, 2019.

(a) Diesel fuel oil, and on similar fuel oils having more or less the same generating power, per liter of volume capacity;

(b) Liquefied petroleum gas used for motive power, per kilogram;

(c) Bunker fuel oil, and on similar oils having more or less the same generating power, per liter of volume capacity; and

(d) Petroleum coke, per metric ton.

The excise tax rate on liquefied petroleum gas (LPG) increased by P1 to P2 per kilogram effective January 1, 2019.


Inventories of petroleum products as of midnight of December 31, 2018 will not be subjected to the new tax rates, the BIR memorandum stated. (Ventures Cebu)

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