Solons: Plan of gov't to raise tax on oil products will burden consumers

Several congressmen on Tuesday warned that the government’s plan to increase the excise tax on oil products will be an additional burden on consumers.

“The excise tax on fuel would practically be passed on to consumers, ‘yung P10 will have an impact sa food and basic commodities dahil sa mga manufacturers and distributors ipapasa din yan,” Akbayan party-list Rep. Tom Villarin said.

Villarin said measures ought to be put in place for consumer protection. 

On Monday, the Department of Finance (DOF) said it plans to adjust to inflation the excise tax on oil products as part of the reforms eyed to offset the revenue loss from lowering income tax rates.

Finance Secretary Carlos Dominguez III said adjusting the excise tax on fuel would mean an additional of P5.65 per liter on top of the P4.35 per liter, or P10 per liter in total.

The DOF estimated the revenues from higher fuel excise tax at P178 billion.

This is part of the estimated P414.2 billion revenue gains from the government’s planned tax reforms to offset the P173.8 billion loss from lowering personal and corporate income taxes.

'Counter-productive'

Bayan Muna Rep. Carlos Zarate said higher taxes on fuel would be “counter-productive” as it would reduce the projected benefits of lower income taxes.

“Higher taxes for oil would create a domino effect that would spike the prices of basic goods and services like water and electricity,” Zarate said.

“Just imagine, how much a P10 increase in gasoline and P6 increase in diesel would affect the price of rice, fish and meat? Masyado itong magiging mabigat sa mamamayan,” he added.

Zarate said the government should improve its tax collection to offset revenue loss instead of increasing taxes.

Albay Rep. Edcel Lagman said the DOF’s plan will not benefit low-income wage earners who are already exempted from income taxes.

“They will not be spared from cascading burden of the tax relative to VAT and excise taxes on oil products because at the end of the line are the consumers, the very small wage earners who are not beneficiaries of the income tax deduction,” Lagman said. 

The Duterte administration has backed proposals to lower individual tax rates from 32 percent to 25 percent, and corporate tax rates from 30 percent to 25 percent. — VVP, GMA News