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Bacolod City, Philippines Saturday, January 28, 2017
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Fuel tax hike to raise P807.4B

MANILA – About Php807.4 billion in additional revenues will be available to fund infrastructure projects until 2022 if the proposed hike in oil excise taxes is approved as soon as possible.

“This is a highly progressive tax because we will be removing subsidies on the fuel consumption of the top 10 percent of households with monthly incomes of around Php115,000 and above who consume almost 51 percent of fuel in the country,” Department of Finance Undersecretary Karl Kendrick Chua said.

Last week, House Ways and Means panel head Rep. Dakila Carlo Cua filed House Bill No. 4774, which contains DOF's proposals under its Comprehensive Tax Reform Program.

Chua said that if both houses of Congress give their thumbs up on the CTRP, additional revenues would be around Php36.1 billion this year, Php120.9 billion in 2018, Php147.2 billion in 2019, Php156.9 billion in 2020, Php167.6 billion in 2021, and Php178.7 billion in 2022.

He said that the top one percent of Filipino households, or those with monthly income of about Php293,000, accounts for about 13 percent of the country's fuel consumption.

Thus, instead of indirectly subsidizing the rich excise tax on fuel must be increased to have the funds to spend for programs that would benefit the greater number of Filipinos, he said.

“Lower-income households will see a minimal increase in excise tax payments compared to richer households. In particular, the lowest 10 percent of households will see a Php160 increase in excise tax payments per year, while the richest 10 percent will see a Php4,316 increase annually. This is an indicator of a highly progressive tax,” he said.

Finance officials repeatedly said that excise tax on fuel had not been increased in the last 20 years.

Diesel, kerosene, and liquefied petroleum gas have been exempted from the excise tax since 2005 and were taxed at low rates of around Php 1.63 per liter between 1997 and 2004, while gasoline has been taxed at only Php4.35 per liter for the past two decades.

Under HB 4774, excise taxes on fuel products will be increased on a staggered basis from 2017-19 and will be indexed by four percent for inflation from 2020 onwards.*PNA


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