DOF sees take from higher oil excise doubling to P249B by 2022
By 2022, the revenue gain from higher excise taxes on oil is seen almost doubling to P249 billion, once the higher rates are implemented by next year.
Finance Undersecretary Gil S. Beltran also told the House appropriations committee Monday night that the Department of Finance (DOF) would recommend removing the exemption from 12-percent value-added tax of cooperatives as well as socialized housing.
Finance Secretary Carlos G. Dominguez III earlier unveiled the plan to reduce VAT-exempt and zero-rated transactions.
“Our VAT tax rate is 12 percent and yet we collect as a percentage of GDP [gross domestic product] only 4.2 percent. Thailand, whose VAT rate is 7 percent, collects [also] 4.2 percent [of GDP]. In other words, we have a lot of exemptions and we have lots of zero-rated transactions. So we have to collect on that side,” Dominguez had explained.
As for the higher levy on fuel products by adjusting rates to inflation, finance officials said the government stands to collect an additional P130.51 billion in 2017, P158.76 billion in 2018, and P249 billion in 2022.
The DOF expects higher oil excise as a major revenue source that will compensate for foregone revenues once income tax rates are slashed, as promised by President Rodrigo Duterte.
The reduction in personal and corporate income tax rates, currently at 32 percent and 25 percent, respectively, will result into foregone revenues totaling P174 billion in the first year of implementation.
The excise tax adjustment will entail, in the case of regular, raising the levy from P4.35 per liter at present to P10 per liter next year, P10.40 per liter in 2018, and further rise to P12.17 per liter by 2022.
For diesel, from zero at present, an excise tax of P6 per liter would be slapped next year, P6.24 in 2018, until it goes up to P7.30 by 2022.
House Deputy Speaker Romero Federico “Miro” S. Quimbo, however, said adjusting excise on diesel would be regressive, as such would have an impact on the transport expenses of the lower 30 percent of the population.
Dominguez earlier admitted before legislators that an increase in oil excise taxes may result into an additional P1 in basic jeepney fare.
The finance chief nonetheless pointed out that as a whole, it will be the rich who would shoulder the bulk of the higher fuel costs.
“Statistics showed that of the 20 million families in the Philippines, two million or 10 percent consume 60 percent of oil [consumption], with 200,000 of [the richest] families consuming 25 percent” of the total, Dominguez said.
According to Dominguez, they plan to provide subsidies to poor families, similar to the conditional cash transfer program, who could be affected by higher fuel costs.
Besides the proposed higher levy on oil, Dominguez said they were also “looking at a tax on sugary and fatty foods to encourage consumers to buy healthier food, akin to the sin taxes.” The “sweet” tax will result into a revenue gain of P18 billion, on top of P20 billion from additional taxes on fatty food.
