2020 Fuel Excise Tax to take effect with Final Tranche of the Train Law

Posted on Posted in 2019-2020

Written by: Hanie Andrade

Illustration by: Lexa Burroughes


The third and final tranche of the Tax Reform for Acceleration and Inclusion Act (TRAIN) law came into effect last January 1, 2020. Effective in the year 2018 and took its final effect this 2020, one of the commodities affected by the law are petroleum products. With this, the retail price of petroleum products saw an increase of at least PHP 1 per liter and is still expected to rise even further. 

The list of fuel products includes gasoline, diesel, kerosene, and liquefied petroleum gas (LPG). Each of these products had an immense increase in price through recent years, and have barely gone down, only decreasing by centavos and a few pesos. 

As reported by CNN Philippines recently, this year, prices rose to PHP 1 per liter for both gasoline and kerosene, PHP 1.50 per liter for diesel, and PHP 1 per kilogram of LPG. Added on top of the previous years’ fuel excise taxes, the petroleum products rose to PHP 10 per liter for gasoline, PHP 6 per liter for diesel, PHP 5 per liter for kerosene, and PHP 3 per kilogram of LPG. 

In the year 2018, the first tranche of the TRAIN law came into effect, which caused an upsurge on the fuel prices. The 2018 fuel excise tax with Value Added Tax (VAT) was PHP 7.84 per liter for gasoline, PHP 3.36 per liter for kerosene, PHP 2.80 per liter for diesel, and PHP 1.12 per kilogram of LPG (CNN Philippines, 2019).

These said prices are subject to the 12% VAT as well as additional tariffs. The Department of Energy (DOE) advised oil companies to sell their 2019 inventories first before applying the updated fuel excise taxes on the new supplies. To ensure that fuel companies follow through with the DOE’s advisory, Senator Win Gatchalian encouraged the energy department to create a task force that will closely monitor the implementation of the new round of fuel excise tax increases. “Huwag na nating hayaan ang ilang mapagsamantalang retailers na ibenta sa mataas na halaga ang kanilang mga lumang imbentaryong produkto, gayong nabili nila ito bago pa man maimplementa ang third tranche ng excise tax sa fuel,” the senator said (OSWG, 2020). 

[We should not allow opportunistic retailers to sell their products from older inventories at higher prices as they bought them before the third tranche of the excise tax on fuel was implemented.]

With the number of vehicles increasing every year, people are becoming more and more dependent on fuel to see their livelihoods. As reported by the Metropolitan Manila Development Authority (MMDA) in 2018, the average number of cars passing through EDSA was 251,628 per day. 67% of the road’s traffic consisted of private vehicles, whereas public utility buses only comprised 3% (Abad, 2019). With the number of vehicles traveling each day, this illustrates how vital fuel products are to society.

The increase in fuel excise tax has caused a domino effect in the transportation industry. Not only are vehicle owners and drivers affected, but so are the commuters. As a result of the oil price hike, jeepney transportation groups were looking to increase the minimum fare by PHP 1 to PHP 2. According to Pasang Masda president Obet Martin, this is to allow jeepney drivers to deal with rising diesel prices in the global market and locally caused by the TRAIN law. On average, jeepney drivers spend PHP 1,500 worth of diesel fuel per day (Cabrera, 2019).

Despite the many woes that the fuel excise tax has brought upon those affected, it has its benefits in the long run. The Department of Energy Secretary Alfonso Cusi (2019) says increasing fuel excise taxes are a necessary sacrifice for the benefit of our country. “Let us remember that the revenues from TRAIN will fund important programs, such as free education, increase in the salaries of our public school teachers, as well as crucial infrastructures under the ‘Build, Build, Build’ program.”

With the long term effects of the TRAIN law being more extensive and more positive, what about its consequences on a smaller scale?

Due to the possible changes in transportation fares, commuters will have to adjust the way they ration their expenses. Some of these commuters are students who have a limited allowance. Having to budget their transportation fees, amongst other things, is a struggle that many of them will face. Let us not forget the vehicle owners and drivers themselves. Being stuck in traffic is something that many of us experience daily, and it is not getting any better despite the continuous efforts of the administration. Having to add that on top of fuel expenses puts motorists in double jeopardy. 

Though not all households have vehicles to spend on, they spend money on the alternative form of transportation, which is through commuting. As fuel prices increase, it has brought on a few changes to the Philippine economy and the Filipinos’ state of living. The TRAIN law, which falls under the Comprehensive Tax Reform Program (CTRP), has good intentions and high hopes for the Philippines, but many are struggling with the adjustments brought upon by the administration. 

With the start of a new year came along the final tranche of the TRAIN law. The Republic Act No. 10963 is quite controversial, having negative and positive effects both in the short and long term. It has caused an increase in products’ retail prices, one of these being petroleum products. Ever since the tax reform package took into effect at the beginning of 2018, petroleum products rose to at least PHP 3. 

Fuel companies were advised to consume their previous inventories before applying the current rates given to them. To guarantee that these companies comply with the DOE’s advisory, Senator Gatchalian urged the energy department to organize a task force that will ensure these companies’ compliance. 

Amidst the peoples’ plight, DOE Secretary Cusi claims that these fuel price hikes, as well as other retail price increases under the TRAIN law, is for the greater good of the Filipinos. The ultimate goal of [the] tax reform is to be able to fund programs, services, and commodities through the revenue it receives from excise taxes. There are numerous provisions under this law, a few of them being the adjusted oil price taxes, adjusted automobile excise taxes, as well as excise tax on sweetened beverages. 

Through the revenue of these excise taxes (and a few more provisions), this law will be able to fund numerous projects. The first of many is VAT-exempt medicines. Effective January 1, 2019, this program enables people to avail of VAT-exempt medications for conditions such as diabetes, high cholesterol, and hypertension. Better quality healthcare services are also being funded through tax reform. One of the goals for this program is to be able to achieve 100% PhilCare coverage as well as improving health centers and hire more medical staff. 

Fuel vouchers are also being provided to qualified beneficiaries through what is known as the Pantawid Pasada Program (PPP). The program is to offset the impact of the higher fuel excise tax and to allow those in the transportation industry, specifically franchise jeepney holders, to adjust to the increase in petroleum prices. According to the official website of the Department of Finance, “as of May 28, 2019, around PHP 518 million-worth of fuel cards were distributed to 103, 567 beneficiaries” (Department of Finance, n.d.). 

As one of the provisions under the TRAIN law, the fuel excise tax is one of the few ways the government can offset the loss of revenue (Almonte, 2017). But even if it is in its third and final year, motorists are still struggling to adjust to the frequent changes in oil prices. Jeepney drivers and franchise motorists are still dismayed despite the PHP 20, 000 fuel subsidy provided by the government (Caberera, 2019). They believe this is simply a temporary fix to the current problems they are facing, and from the looks of it, prices are still expected to increase on top of the fuel excise tax. 

Amidst these problems the motorists and those of the transportation industry are facing, the government believes that the hardships that the people are currently experiencing are a necessary sacrifice that we all must undergo to achieve the success we hope for our country’s future. 



Abad, M. (2019, October 10). FAST FACTS: State of Metro Manila’s public transport system. Rappler. Retrieved from https://www.rappler.com/newsbreak/iq/242244-things-to-know-about-metro-manila-public-transport-system

Almonte, L. (2017, December 18). PH shipping, trucking rates seen to rise with fuel excise tax hike. PortCalls Asia. Retrieved from https://www.portcalls.com/ph-shipping-trucking-rates-rise-fuel-excise-tax-hike/

Cabrera, R. (2019, December 28). 5 groups eye P1 jeepney fare hike next year. The Philippine Star. Retrieved from https://www.philstar.com/nation/2019/12/28/1980198/5-groups-eye-p1-jeepney-fare-hike-next-year

CNN Philippines Staff. (2019, January 1). Additional fuel excise tax now in effect. CNN Philippines. Retrieved from https://cnnphilippines.com/news/2019/01/01/Additional-fuel-excise-tax-TRAIN-law.html

Department of Finance. (n.d.). Package 1: TRAIN. Retrieved from https://taxreform.dof.gov.ph/tax-reform-packages/p1-train/

Laurel, D. (2019, January 7). DOE on TRAIN: Higher fuel cost a sacrifice for benefit of country. BBC TopGear Philippines. Retrieved from https://www.topgear.com.ph/news/industry-news/doe-train-costs-a962-20190107?ref=article_reco_slide 

Lopez, M. L. (2019, December 30). Higher fuel excise taxes take effect January 1. CNN Philippines. Retrieved from https://www.cnnphilippines.com/news/2019/12/30/Higher-fuel-excise-taxes-2020.html?fbclid=IwAR3_68dgYNsvgIreaO6OaZ6zHQo5DHbnq5-tDALRXv8TSkTG51GHlt9dDvU

OSWG. (2020, January 2). Gatchalian wants task force to monitor fuel tax hike with 3rd tranche of TRAIN law. Philippine Information Agency. Retrieved from https://pia.gov.ph/news/articles/1032196

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