MANILA, Philippines — The World Bank has suggested that the government consider raising the excise tax on gasoline to boost the national coffers in the face of a ballooning budget deficit.

“To ensure quality implementation of the fiscal stimulus plan, the government could consider further desirable revenue measures, such as raising gasoline excises,” the bank said in its latest quarterly update on the Philippines.

Although retail prices of fuel are “not particularly low,” the bank noted that for an oil-importing country, petroleum products in the Philippines are lightly taxed by international standards.

“Gasoline is the most highly taxed product and has an effective tax rate of about 25 percent of the retail price partly because its specific excise rate of P4.35 peso per liter has been fixed in nominal terms since 1996,” the bank said.

Aside from the excise tax, petroleum products are levied a 3-percent import tariff and the 12-percent value-added tax (VAT).

The excise tax on diesel was removed when VAT coverage was extended to fuels in 2006, and the VAT rate was increased from 10 percent to 12 percent.

“Mostly as a result of the non-indexation of gasoline, petroleum excise collection is one percentage point of GDP (the total value of economic output) lower in 2008 than it was a decade earlier,” the WB added.

By contrast, the decrease in excise revenue from tobacco was less than a third of what was lost on petroleum products, the bank said.

The WB said that increasing petroleum excises would produce immediate revenue gains and help ensure the fiscal stimulus program remained controlled and expenditure-driven so as to maximize its effectiveness and targeting.

Such a move would also improve “the progressivity of the tax system as petroleum products are disproportionately consumed by the richer citizens,” it said.

A higher excise tax on gasoline would reduce the cost of the negative effects of gasoline consumption, such as congestion and pollution, the bank said.

It noted that congestion and pollution were “especially bad” in Metro Manila, which dampen the country’s competitiveness and pose health problems.

“Higher excise taxes on gasoline would lower road traffic and partly decongest transport infrastructure (and thus lower) transportation costs,” the bank said.

Hard-pressed on raising more revenues to fund the government’s economic stimulus program and deficit spending, the government has been urging Congress to pass the Malacañang-sponsored bills seeking to impose higher taxes on alcohol and tobacco products that have been languishing in the legislature.

Last Wednesday, however, Finance Undersecretary Gil S. Beltran said the government has softened its stance on the urgent need to implement higher excise taxes on alcohol and tobacco products this year following a “consultation with industry players.”