DAGUPAN CITY — The Department of Finance is seriously studying a World Bank recommendation for the government to raise the excise tax on gasoline to boost its revenues, Finance Secretary Margarito Teves said here on Friday.
But he said this was not the right time to increase the excise tax on gasoline. “We are now in difficult times and in fact, we did not propose it to Congress,” said Teves, who was guest in a meeting of assessors and treasurers in the Ilocos region.
The Department of Finance earlier urged Congress to increase the excise tax on tobacco and alcohol, saying the law needs to be restructured to align tax rates with neighboring countries.
“But we’ll study that [WB recommendation] and maybe, when we’re convinced that we need to add, maybe, we would implement it at the proper time,” he said.
Quarterly update
In its latest quarterly update, the World Bank had suggested to the government to increase the excise tax on gasoline “to ensure quality implementation of the fiscal stimulus plan.”
The bank had noted that for an oil-importing country, petroleum products in the Philippines are lightly taxed by international standards.
But Teves said although the Philippines has the lowest tax rate compared to other countries, “we should also be looking at the per capita income of our people compared to those that the World Bank had cited.”
Although petroleum products have big contribution to national revenue, there are other ways to increase it and reduce the country’s deficit, he said.
He admitted that his office has been having difficulty in meeting its revenue collection target because of the global financial crisis that has affected the country.
Lower than target
“So, all in all, because of slowdown in the economy, compared to what we have previously projected, we now have a lower collection in relation to our target,” he said.
The deficit as of May this year was P123 billion, which, Teves said, was lower than the P148-billion target.
“We are still on track. Our overall target for this year should not exceed P250 billion,” he said.
He said the country could not afford to have a large deficit because of its huge foreign debt. “We might sink deeper in our debt if we increase our deficit,” he said.
The country has a foreign debt of P4 trillion. “But I’m saying that despite our situation, we need to look for other ways to collect [more revenues] so that our country will not be hurt,” he said.
To do this, he said, congressional support is needed for the so-called revenue-enhancing measures, such as the rationalization of fiscal incentives and the excise tax on cigarettes and alcohol products.
A militant lawmaker Friday also opposed the proposal of the World Bank to increase taxes on oil products claiming that these would only weigh down consumers already burdened by the oil companies’ excess profits of as much as P167 million a day.
Anakpawis party-list Rep. Joel Maglunsod warned that the WB’s proposal to jack up excise taxes would only give oil companies another excuse to increase their prices and “bleed Filipinos until they die.”
Unacceptable
The WB noted that the excise tax on gasoline products had been pegged at P4.35 per liter since 1996 and this has led to the petroleum tax’s declining contribution to government revenue collections over the last decade.
But in a statement, Maglunsod said the WB proposal was “unacceptable and warrants strong opposition from consumers.”
He cited a study by the Ibon Foundation which showed that local pump prices have been increasing much faster than Dubai crude oil from January to March this year.
This has led to an “overprice” that has padded the big three’s bottom line—Petron Corp. gets P64.64 million in excess profits a day; Pilipinas Shell with P49.94 million; and Chevron Philippines with P23.55 million, he said. With a report from Gil C. Cabacungan Jr.
