Higher excise tax on oil products to raise gov't revenue by P134B

The Department of Finance (DOF) plans to increase the excise tax on oil products by more than double to raise additional revenue for the government, as part of its comprehensive tax reform program.

Finance Undersecretary Karl Chua told the House Committee on Ways and Means the Duterte administration intends to raise as much as P134 billion in the first year of implementing the new excise tax rates on oil products.

Chua noted the DOF is looking at raising the excise tax on gasoline to P10.00 per liter from the current P4.35 per liter, and on diesel – which currently has no excise tax – to P6.00 per liter.

"This will help offset some of losses in personal income taxes," he said.

President Rodrigo Duterte said in June that the adoption of a comprehensive tax reform package is high on the 10-point economic agenda of his administration, with lowering the income tax rates as the priority.

Rep. Prospero Pichay said the DOF must keep in mind that raising taxes on oil products would impact on major commodities.

"Look at increasing revenue without affecting commodities," the lawmaker said.

Certain subsidies

The DOF said this will be countered by providing the public with certain subsidies.

"We will provide subsidy to commuters, such as cash cards or upfront discount," Chua said. He did not elaborate.

On the sidelines of the hearing, Chua told reporters the subsidies could be done by expanding the government's conditional cash transfer (CCT) program.

"Regular commuters could be given a cash card with which they can avail themselves of discounts," Chua said.

He clarified the details on increasing the excise tax have yet to be finalized. "It will be gradual. The proposal will have a gradual implementation beginning 2017 and will mature by 2019," he said.

Asked to elaborate, Chua said the increases may be done gradually over three years.

The final revenue figure from the higher excise tax could reach up to P160 billion. "These projections can always change," he said. — VDS, GMA News