DOF says gov't will lose billions of pesos if excise tax is suspended
The government will lose billions of pesos if the fuel excise tax is suspended as what transport groups have been clamoring to cushion them from high oil prices, a Department of Finance (DOF) official said on Tuesday.
During the ''Laging Handa'' virtual public briefing, Assistant Finance Secretary Paola Alvarez explained that under the House Bill 10488, the government will lose P48.7 billion while a total loss of P69.3 billion is expected under the Senate Bill 2445.
Earlier in the day, the House Committee on Energy approved a substitute bill amending the Oil Deregulation Law. The bill calls for the suspension of collecting fuel excise tax from June to November 2022.
"In the House bill, they are proposing to suspend from June to November 2022; if we do that we will suffer the loss of P48.7 billion. While in the Senate Bill 2445, its proposition is (for the fuel excise tax) to be suspended from June to December 2022. If we do this, we will lose P69.3 billion," she said.
"For overall, if we suspend all the excise tax including the VAT on excise tax of all kinds of fuel we will lose P138.8 billion in one year or 0.6 percent of our GDP growth domestic product," she added.
Alvarez said more losses are expected if the suspension of the excise tax will become automatic.
"It will have an effect in the long run because if we make the suspension of excise tax automatic whenever we will have such event... that there is no need for a law to suspend this, in the long run, we will have a big loss of around P1.5 trillion until 2032," she said.
Alvarez also reiterated the Department of Finance proposal of providing targeted support for the poor instead of suspension of the tax on oil products.
"If we look at the consumption, 48.8 percent of those who consume oil are those with higher income households. Meanwhile, the lower income households only had a consumption of 13.8 percent," she said.
"So we are thinking of providing a targeted subsidy for the PUV and jeepney drivers registered in our Pantawid Pasada Program. Because of that, we can control not to decrease our collection," Alvarez said.
"We need to push our economic and government spending. If not, it will really affect the return of our economy to the pre pandemic level," she added. Robina Asido/DMS
