Metro Manila (CNN Philippines, December 30) — Heads up, motorists: fuel prices will be higher in 2020 as the third and final wave of excise tax increases takes effect January 1.

Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law requires another increase in fuel excise duties, pegged at ₱1 per liter for gasoline and kerosene, ₱1.50 per liter for diesel, and ₱1 per kilogram of liquefied petroleum gas (LPG).

This is on top of previous tax hikes that took effect in 2018 and 2019, which have cumulatively raised duties to ₱10 per liter of gasoline, ₱6 per liter for diesel, ₱5 per liter of kerosene, and ₱3 per kilogram of LPG used for cooking. The tax is bigger for auto LPG at ₱6 per kilogram beginning Wednesday.

Collections up

As of end-September, the Bureau of Customs racked up ₱64.5 billion from excise duties on imported fuel products, well above target.

The government collected roughly ₱78 billion in fuel excise taxes in 2018, broken down into ₱39 billion from the Bureau of Internal Revenue and ₱38.6 billion from the Bureau of Customs, data from the Department of Finance showed.

The TRAIN law sought to slap higher taxes on fuel products to raise more funds for big-ticket infrastructure and other government projects.

The looming higher fuel taxes will come a day after oil companies announced fresh increases in pump prices due to movements in the international oil market. Some fuel companies have announced fuel price hikes on December 31 worth ₱0.50 per liter for diesel and ₱0.85 per liter for gasoline.

Jeepney fare hike looms

A transport group said it will seek higher minimum fares for jeepney rides with the increase in fuel prices.

Pasang Masda president Obet Martin said the group is preparing a proposal in January to raise the minimum jeepney fare to ₱11 for the first four kilometers. The current minimum fare is ₱9.

"Ang benchmark namin sa ₱9 is ₱40-₱42 (per liter). Ngayon, magiging ₱45 'yan at baka sa isang linggo pa ay tumaas na naman ito... Ang mawawalang kikitain ng driver dito, kulang-kulang ₱100 isang araw. Malaking bagay po sa amin 'yan," Martin told CNN Philippines' Balitaan.

[Translation: Our benchmark for the ₱9 minimum fare is that fuel prices are between ₱40-₱42 per liter. Now, that will rise to ₱45 per liter and may even go up in the coming weeks... Drivers will lose about ₱100 per day — it's a big deal for us.]

He said the government fuel subsidy program is not enough, and is only a "band-aid solution" for struggling jeepney drivers.

Martin said the proposed fare hike would be provisional and may be withdrawn should fuel prices dip in the coming months. He added Pasang Masda will not seek an adjustment in the rate per succeeding kilometer.

Militant group Bayan Muna warned that oil prices could shoot up by as much as ₱7 per liter given the double whammy of the latest round of fuel rate hikes and the additional taxes, on top of the added cost of transporting these products from depots to retail outlets.

"This would have a tremendous effect on the prices of basic goods as well as transportation fares and may be worse than the price shocks we experienced in 2018," Bayan Muna Rep. Carlos Isagani Zarate said in a statement.

Fuel products are also subject to the 12 percent value added tax on top of the higher tariffs. Like in previous years, oil companies need to sell their 2019 inventories first before they can apply the higher excise taxes on new stocks.