Monday, May 28, 2018

Hike in taxes on oil products sought

By: - Reporter / @bendeveraINQ
/ 12:10 AM January 12, 2017

As excise tax on oil remained unadjusted for two decades now, the government is incurring foregone revenue of about P145 billion yearly, equivalent to more than 1 percent of the gross domestic product (GDP), the Department of Finance said Wednesday.

In a statement, the DOF said now would be a good time to raise the taxes slapped on oil products, given lower global prices and expectations that the low price environment would continue in the near-term.

Increasing fuel excise is part of the first package of the DOF’s tax policy reform program.


“The current gasoline excise tax rates have not changed for the last 20 years while diesel has been tax exempt for the last 12 years. These rates, which have not been corrected to account for inflation, has led to a massive revenue loss of about P145 billion (in 2016 prices), which represents more than 1 percent of the GDP,” Finance Undersecretary Karl Kendrick T. Chua said.

“Our proposal to adjust the fuel excise tax to about P6 per liter merely updates the rates to current levels as this represents the cumulative inflation since 1997. Even with the adjustments, the retail prices of gasoline and diesel will still be much lower than the rates during the oil price shocks of 2011 and 2012,” Chua added.

The Finance official maintained that while domestic oil prices were expected rise following the increase in taxes, the end-result to consumers of the entire first tax package, which included reduction of personal income tax rates, would be increased take-home pay.

“The lower personal income tax rates that the DOF is proposing under its comprehensive tax reform program will more than offset the slightly higher transport, food and commuting costs,” Chua said.

As for low-income and vulnerable groups, “the DOF is proposing a targeted cash transfer program for the poorest 50 percent of households. The program includes cash transfer, the reintroduction of the ‘Pantawid Pasada’ program that will provide fuel price discounts to public utility vehicles, and a jeep modernization program to improve the engine efficiency of these vehicles,” according to Chua.

“The proposed initiatives will cushion the impact of higher fuel excises on transportation, commuting and food costs for the poorest 50 percent,” he said.

“With higher revenue from the oil excise tax reform, we can fund the massive public infrastructure program that is needed to reduce traffic congestion, improve connectivity, and raise the economic productivity of Filipinos, especially those living in the countryside. Without the comprehensive tax reform program, all these improvements would never be possible,” the Finance official said.

Before Congress went on Christmas break, the DOF pitched a revised version of the first package of its comprehensive tax reform proposal, which will include mandatory marking of oil products as well as the grant of absolute amnesty on estate tax deficiency.


A copy of the revised draft bill obtained by the Inquirer said the first package “seeks to lower personal income taxes, broaden the value-added tax (VAT) base, adjust excise taxes on petroleum and automobiles, reduce the estate and donors tax, and provide an amnesty to past estate tax cases.”

Under the first package, the following tax administration measures were to be pursued: mandatory use of fuel marking; recognition of e-receipts; mandatory interconnection of large and medium firms point of sale machines and accounting system with the Bureau of Internal Revenue; mandatory use of GPS locks when transporting cargo from ports to economic zones and free ports; shift to quarterly VAT and percentage tax filing to improve compliance and relaxation of bank secrecy for fraud cases.

While it was initially supposed to be included in the succeeding tax reform packages, the DOF is now moving to include in the first package the reduction of estate and donors tax to 6 percent, while also providing absolute amnesty on past estate taxes that had been unpaid.

The bill retained the salient provisions of the original first package as proposed by the DOF, including adjusting tax brackets to correct “income bracket creeping”; reducing the maximum personal income tax rate to 25 percent over time, save for the “ultra-rich” who would be slapped a higher 35 percent; and shifting to a simpler modified gross system.

Don't miss out on the latest news and information.
View comments

Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.

TAGS: Business, economy, News, oil, taxes
For feedback, complaints, or inquiries, contact us.

© Copyright 1997-2018 | All Rights Reserved

We use cookies to ensure you get the best experience on our website. By continuing, you are agreeing to our use of cookies. To find out more, please click this link.