TRAIN bill to add PHP 2.65 per liter to gasoline in 2018

The House of Representatives has approved House Bill 5636 on its second and third reading with 246 votes in favor, 9 against and one abstention. The tax reform package with President Rodrigo Duterte's certification of urgency was passed before the lower house adjourned its first regular session on Wednesday, May 31, 2017.

If passed into law, additional excise taxes will be imposed on gasoline and other petroleum products starting January 1, 2018,  as part of the Tax Reform for Acceleration and Inclusion (TRAIN) or House Bill 5636.

The TRAIN bill hopes to lower personal income tax rates, and compensate government’s revenue collection through consumption taxes such as Value Added Tax (VAT) and excise taxes on fuel and automobiles.

Consumers can expect gasoline fuel (regular, unleaded and leaded) to receive an additional excise tax from its current rate of PHP 4.35 per liter to PHP 7 per liter in 2018, PHP 9 in 2019 and PHP 10 in 2020. This may increase the average price of a full tank or a motorcycle anywhere from PhP 15 – PhP 20 in 2018.

Lubricants, greases, processed gas, waxes and petrolatum, aviation jet fuel, and alcohol fuel will likewise be taxed more under the new approved house bill.

Naturally, the new scheme is expected to impact logistics costs and transportation of goods and services, which are expected to be passed on to consumers as well. The difference between House Bill 5636 and the controversial House Bill 4774 is that the provision for an additional 4% increase in excise taxes annually from the third year onwards has been removed.

In spite of the quick approval and the president's certification of urgency, the senate has yet to pass their version of the tax reform bill and both houses need to convene before it gets submitted to the executive branch for enactment into law.