Gov't faces P4.1B revenue loss from LPG, kerosene excise tax suspension - DOF

The suspension of the excise tax on kerosene and liquefied petroleum gas (LPG) for three months due to the Middle East crisis is projected to cost the government P4.1 billion in potential income, an official from the Department of Finance (DOF) said Tuesday.

"For LPG and kerosene, if you take a look at the law, it’s a maximum of three months, so let’s talk about three months. [And] assuming 100 USD price per barrel, on average. So, for full suspension of LPG and kerosene, the losses will be around P4.1 billion for three months," Finance Undersecretary Karlo Fermin Adriano said at a Palace press briefing. 

''Now, if you decide to include a suspension of diesel and gasoline and LPG and kerosene on top, it will be around P43.6 billion in losses in three months,'' Adriano added.

According to Adriano, there will be an additional value-added tax collection of P13 to P14 billion due to higher fuel prices.

"If you consider full suspension of diesel and gasoline, if you include it, again, the total losses will be P43.6 billion. And your additional VAT collection will be around P13 to P14 billion, and then there’s a negative revenue loss of around P30 billion," he said. 

The DOF has said that the decision to fully suspend excise taxes on kerosene and LPG directly helps every Filipino family and small businesses such as carinderias. 

Citing the Development Budget Coordination Committee (DBCC), DOF Secretary Frederick Go said the agency had determined that suspending excise taxes on diesel and gasoline would not likely provide meaningful relief, “as any reduction in retail pump prices would be marginal and largely offset by prevailing market dynamics.”

On Monday, President Ferdinand ''Bongbong'' Marcos Jr. announced that he had suspended the collection of excise tax on LPG and kerosene amid high fuel prices in the country.

On March 25, Marcos signed Republic Act 12316, giving him the emergency power to suspend or reduce the excise tax rate on fuel. —VBL, GMA News