Philippines passes major tax reform law

President Rodrigo Duterte has vowed to launch a “golden age of infrastructure,” with spending of about $170 billion for roads, railways and airports during his six-year term. (AFP)
Updated 14 December 2017
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Philippines passes major tax reform law

MANILA: The Philippines has passed a tax reform bill at the heart of President Rodrigo Duterte’s economic agenda, officials said Thursday, raising levies on coal, cars, soft drinks and cosmetic surgeries to finance the country’s crumbling infrastructure.
Economists and environmentalists have praised the package, with the Philippines winning a credit rating upgrade this week from Fitch Ratings and green campaigners hailing the higher tax on coal.
Officials said the tax reforms, the most significant revenue-boosting measure introduced since Duterte took office last year, would finance increased spending on infrastructure to ease the cost of doing business.
“The tax reform (act) seeks to achieve a simpler, fairer, and more efficient tax system characterized by lower rates and a broader base, to encourage investment, job creation, and poverty reduction,” Finance Secretary Carlos Dominguez said in a statement.
The government has warned that bad roads, crowded trains and poor Internet speed have hindered the country’s competitiveness and threaten to derail efforts to lift millions out of poverty.
The key provisions of the bill, which Duterte is expected to sign later this month, includes a rise in the excise tax on coal, the fuel that runs almost half the country’s power plants.
The coal tax will increase incrementally to ten-fold or 100 pesos (SR7.44) a ton by 2020 according to the version passed in Congress late Wednesday.
The act also significantly raised excise taxes on automobiles, petroleum products including diesel, gasoline and cooking gas, and jacked up mining levies.
The effort to raise revenues also led to a “sweetened beverage tax,” an excise tax on “cosmetic procedures, surgeries and body enhancements,” and the doubling of tax rates on dollar deposits, capital gains tax and stock transactions.
The affected sectors have warned of an inflation spike but Congress has described the legislation as pro-poor for lowering income tax rates and exempting some small businesses from paying a sales levy.
Duterte has vowed to launch a “golden age of infrastructure,” with spending of about $170 billion for roads, railways and airports during his six-year term.
International credit rating agency Fitch had earlier cited the impending passage of the tax reforms as one of the reasons behind its decision to upgrade the Philippines’ credit rating on Monday.
“We estimate the bill to be net revenue positive, reflecting an expansion of the VAT (value-added tax) base and higher taxes on petroleum products, automobiles and on sugar sweetened beverages, which would more than offset a lowering of personal income taxes,” Fitch said in a statement.
Congress this week also passed a 3.767-trillion-peso national budget for 2018, a 12.4-percent increase from last year.


Oil rises after US Navy destroys Iranian drone

Updated 19 July 2019
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Oil rises after US Navy destroys Iranian drone

  • The International Energy Agency is revising its 2019 global oil demand growth forecast to 1.1 million barrels per day
  • Speculators have exited options positions that could have provided exposure to higher prices in the next several years

TOKYO: Oil prices rose more than 1 percent on Friday after the US Navy destroyed an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude flows, again raising tensions in the Middle East.
Brent crude futures were up 82 cents, or 1.3 percent, at $62.75 by 0100 GMT. They closed down 2.7 percent on Thursday, falling for a fourth day.
West Texas Intermediate crude futures firmed 61 cents, or 1.1 percent, at 55.91. They fell 2.6 percent in the previous session.
The United States said on Thursday that a US Navy ship had “destroyed” an Iranian drone in the Strait of Hormuz after the aircraft threatened the vessel, but Iran said it had no information about losing a drone.
The move comes after Britain pledged to defend its shipping interests in the region, while US Central Command chief General Kenneth McKenzie said the United States would work “aggressively” to enable free passage after recent attacks on oil tankers in the Gulf.
Still, the longer-term outlook for oil has grown increasingly bearish.
The International Energy Agency (IEA) is reducing its 2019 oil demand forecast due to a slowing global economy amid a US-China trade spat, its executive director said on Thursday.
The IEA is revising its 2019 global oil demand growth forecast to 1.1 million barrels per day (bpd) and may cut it again if the global economy and especially China shows further weakness, Fatih Birol said.
“China is experiencing its slowest economic growth in the last three decades, so are some of the advanced economies ... if the global economy performs even poorer than we assume, then we may even look at our numbers once again in the next months to come,” Birol told Reuters in an interview.
Last year, the IEA predicted that 2019 oil demand would grow by 1.5 million bpd but had already cut the growth forecast to 1.2 million bpd in June this year.
Speculators have exited options positions that could have provided exposure to higher prices in the next several years, market participants said on Thursday.
US offshore oil and gas production has continued to return to service since Hurricane Barry passed through the Gulf of Mexico last week, triggering platform evacuations and output cuts.
Royal Dutch Shell, a top Gulf producer, said Wednesday it had resumed about 80 percent of its average daily production in the region.