BOC mulls over hike in excise tax on oil

MANILA, Philippines–Customs Commissioner Alberto D. Lina sees a raise in excise tax slapped on petroleum products as one solution to reverse the slower growth in collections caused by cheaper oil.

In a telephone interview on Monday, Lina noted that while the Bureau of Customs (BOC) had been “doing all right” in terms of collecting import duties and taxes, the drop in global oil prices had been denting revenues.

“We have to collect P1.5-2 billion a day. It would be challenging if collections from oil products decrease drastically,” Lina said.

Taxes and duties from oil products contribute over a fifth of the BOC’s annual collections.

The country imports and consumes an average of 120 million barrels of oil a year.

Last week, former BOC chief John Phillip P. Sevilla reported that the BOC’s collections during the first quarter grew 6.6 percent year-on-year to P92.2 billion, at a slower growth rate compared with the double-digit rise posted last year.

The collection in the first quarter was also short of the P103.3-billion goal for the first three months.

Even as collections from non-oil products jumped by almost a fourth to P77.2 billion during the three-month period, revenues from oil imports slid by 38.1 percent to P14.9 billion despite import volumes of the commodity having increased by almost a fifth.
Global oil prices dropped by about 53 percent year-on-year during the first quarter.

Sevilla had said that the BOC’s “realistic” collection target should only be P373 billion, much lower than the adjusted goal og P436.5 billion set by the interagency, Cabinet-level Development Budget Coordination Committee early this month.

The original 2015 target for the BOC was P456.4 billion, which was cut to reflect about P20 billion in foregone revenues expected from cheaper oil.

For Lina, a viable “intervention” to arrest the slower growth of the BOC’s collections to date is to jack up the excise tax on petroleum products, which have stayed low since the 1990s.

Lina noted that excise taxes can be increased by legislation as well as by the President.

“The power to tax is in Congress, but the President can also raise some tariff rates minimally, by 5-10 percent,” he said.

The National Economic and Development Authority as well as the World Bank had said that now was a good time to increase petroleum excise tax rates.

The World Bank had estimated the losses due to non-adjustment of prevailing rates at about P120 billion a year.

Last year, the BOC collected P369.3 billion, up by a robust 21.1 percent from the 2013 take but below the P408.1-billion target.