Duterte approves DOF recommendation not to suspend excise tax
By Robina Asido
President Rodrigo Duterte approved the recommendation of the Department of Finance (DOF) not to suspend the fuel excise tax and to provide subsidies for the members of "Pantawid Pasada" and "Pantawid Pamilyang Pilipino Programs" (4Ps) of the government.
Duterte also approved the DOF's proposed P33.1 billion unconditional cash transfer to help poor households adjust to rising oil prices, Acting Presidential Spokesperson Martin Andanar said in Wednesday's press conference.
"So ok, that is the policy of the Executive Department. Now, thank you for the enlightened picture'', Duterte told Finance Secretary Carlos Dominguez III who asked for him to support his recommendation for the fuel excise tax during the taped Talk To The People aired on Wednesday morning.
Dominguez made his recommendation following the series of proposals they received to suspend the imposition of excise taxes on petroleum products.
Duterte met with the government's economic managers to discuss how to face the challenge of rising oil prices, up for the 11th week on Tuesday.
"So this is our firm recommendation, Mr. President. One, to retain the fuel excise tax imposed under TRAIN Law because we already budgeted it for salaries of school teachers; Build, Build, Build Program and other expenses. And second, we provide targeted subsidies of P200 per month, per household for one year to the bottom 50 percent of the Filipino households, this will amount to P33.1 billion in budgetary requirements," he said.
Dominguez admitted that his recommendations are not enough to address the effect of the continued oil price increase but he noted it is the only solution that the government can do for now.
"We realized that this is not enough but this is what we can afford as of this time. And to make sure that our finances, going forward and especially for the next administration are still going to be healthy, this I believe is what we can afford," he said.
"And this is sustainable. This is something that we can sustain and this is something that we can afford as of this time. So I hope that, Mr. President, you will support this recommendation," he added.
Dominguez said since the estimated P147 billion that will be collected from excise tax in 2022 has been put in the budget, the country will have to borrow more money if the excise tax will be suspended.
"That money has already been allocated. And if we do not, if we suspend this, and we don’t collect it, what will happen is our deficit-to-GDP ratio will go up from an estimated 7.7 percent to 8.2 percent. And it will mean that if we will continue to spend the same amount of money, we will have to borrow more money and that will bring up our debt-to-GDP ratio by 60.9 percent to about 61.4 percent," he said.
Dominguez said suspending excise tax is "very inequitable" as it will benefit rich people than the vulnerable sector of the economy.
"If we do reduce the tax, let us analyze now who will benefit. We have analyzed it and we know that the top 10 percent of income earners in the Philippines consume almost 50 percent of all the fuel. In other words, if we look at the top, bottom 50 percent of the Philippines, they only consume 13 percent of the fuel," he said.
"So cutting the tax will benefit more the people who have cars and the other richer people. We will not be benefitting so much the bottom 50 percent of our population, that will make it very inequitable," he added. DMS
