MANILA -- The government is identifying "unnecessary" or non-urgent spending to preserve its deficit target for 2019, following the suspension of the second round of fuel excise tax increases, a finance official said Wednesday.
If the tax increase is suspended for the entire 2019, it could result to P41.6 billion in foregone revenues. This could be offset by P14 billion in value added tax collections, Finance Undersecretary Karl Kendrick Chua told a Senate hearing.
As inflation held at its highest levels in nearly a decade, the government suspended the P2 per liter excise tax increase on diesel and gasoline that was supposed to take effect in January.
The Development Budget Coordinating Committee has set the deficit target at 3.2 percent of gross domestic product in 2019 from 3 percent this year.
"We are keen on preserving the deficit target," Chua said.
The law is "less clear" on when the excise tax increases could resume, Chua said. It calls for the suspension of adjustments when the price of Dubai crude holds at $80 per barrel for 3 months.
The schedule of the resumption "is currently being discussed" by economic managers, Chua said.
If the suspension is hinged on a 3 month cycle, it can be opined that the resumption is also based on a 3 month period, he said.
Pressed by Senator Sherwin Gatchalian, Chua said the suspension could last for "at least" 3 months.