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MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) expects inflation to maintain its range of 2 to 4 percent in two years regardless of higher cuts on petroleum taxes.
Just by month-end, inflation is expected to fall within 1.9 to 2.7 percent, resulting from rice price drops, higher food price, oil price hikes, and higher power charges. In September, inflation rose to 2.3 percent due to price increment in food and non-food commodities. The month presented an 18-month high. In August, there is 1.6 percent increase rate in prices after nine months.
BSP Deputy Governer, Diwa Guinigundo, stated that petroleum’s higher tax cuts, higher power charges, and increased transportation fares would increment inflation by 0.47 percent in 2017, and 0.43 percent the following year. Guinigindo cited that these percentages still fall within the inflation target.
Price of oil in the world market sees a consistent increase. In 2017, it will increase to $48.07 from $40.50 per barrel this year. The succeeding year will pose oil price hike of up to $50.68 per barrel.
Higher tax cuts on oil result to value added tax (VAT) base of P166.8 billion, sugar products tax with P48.7 billion, motor vehicles excise tax with P10.9 billion, and alcohol and tobacco products tax increase with P45.4. Biggest revenue has been recorded at P199.6 billion.
The Department of Finance reckons cutting taxes on premium, regular, unleaded, and leaded gasoline from P4.35 per liter to P10 per liter. The department also reckons reducing levy on currently tax-exempted products like bunker fuel oil, kerosene, denatured alcohol, diesel asphalts, processed gas, and LPG by P6 per liter.
Department of Finance Secretary, Carlos Dominguez, raised Duterte administration’s comprehensive tax reform program for human capital and infrastructure plans. The program pursues reduction of labor earners’ tax burden.