President Rodrigo Duterte has approved the suspension of the P2-additional excise tax on fuel by January next year despite declining prices of oil in the world market, Budget Secretary Benjamin Diokno said on Wednesday.

In his regular forum in Manila, Diokno said Executive Secretary Salvador Medialdea informed him on Tuesday that the President approved the recommendation of the economic team regarding the suspension.

"I just got a communication from the Executive Secretary, saying that our proposal to suspend the P2-additional excise tax on oil next year has been approved," he said.

Late in the day, Malacanang released a copy of Medialdea's memorandum dated November 8 for the economic team, including Diokno, Finance Secretary Carlos Dominguez III and National Economic and Development Authority Secretary Ernesto Pernia.

A copy was also given to Energy Secretary Alfonso Cusi.

"With reference to your Memorandum dated 11 October 2018, please be informed of the approval of your recommendation to suspend the next scheduled increase in the excise tax on fuel, subject to Section 43 of Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Law," Medialdea said.

Diokno said the deferment of the imposition of additional P2-excise tax would not violate the TRAIN Law.

Under RA 10963, the government could suspend the additional P2-excise tax on fuel if the average of Dubai crude oil price based on Mean of Platts Singapore (MOPS) for three months prior to the scheduled increase of the month reaches or exceeds $80 per barrel.

While the price of oil exceeded $80 per barrel previously, for the past weeks, it has been declining.

"I think any government is allowed to do that," he said, citing that during the administration of former President Gloria Macapagal-Arroyo, the implementation of the value added tax was also suspended.

Diokno said the suspension could take effect at least for the first three months of 2019.

He said the economic team might come out with a quarterly assessment of the prices of oil and a recommendation on whether to lift or suspend the additional excise tax.

Under the TRAIN Act, for this year, the additional excise tax on oil amounts to P2.50; for next year, P2; and on the third year, P1.50.

Diokno downplayed the possible impact of the suspension on government's expenditure program.

Citing the Department of Finance's estimate, he said the P26 billion revenue lost is for full year already and is much lower compared to over P3 trillion overall revenue of the national government. Celerina Monte/DMS