PRESIDENT Rodrigo Duterte has approved the proposal of the Department of Finance (DOF) to retain the collection of excise taxes on petroleum products.
This after Finance Secretary Carlos Dominguez III cautioned that halting fuel excise taxes will cut off the total government revenues by P105.9 billion in 2022.
Duterte said he conducted a series of meetings with Cabinet secretaries because his decision would be based on their recommendations.
“The Cabinet members aren’t there for nothing. Sila ‘yung magtrabaho at ako, I will just decide after reading the reports, then I decide. That’s what I’m here for to talk to the nation,” Duterte said during his meeting with Cabinet officials at Malacañan Palace on Tuesday night.
Dominguez informed Duterte that the recommended suspension of fuel excise taxes would merely require the government to “borrow more money” owing to potential revenue losses.
“In 2023, that goes up to P114.4 billion; in 2024, PHP123.6 billion; and so on. For the 10-year average of P160.3 billion a year or a total of P1.76 trillion for 10 years. This is equivalent to roughly one half of one percent of our GDP (gross domestic product),” Dominguez told Duterte.
The proposal would only benefit the rich, Dominguez added.
“The bottom 50 percent of the Philippines, they only consume 13 percent of the fuel. So, cutting the tax will benefit more the people who have cars and the other richer people. We will not be benefitting so much the bottom 50 percent of our population, that will make it very inequitable,” he said.
Dominguez proposed instead providing monthly subsidies of P200 each to around 12 million underprivileged Filipinos for a year.
“So, to summarize again: retain the fuel excise taxes imposed under TRAIN (Tax Reform for Acceleration and Inclusion) Law [and] provide targeted subsidies to the lowest 50 percent of the households in the Philippines, totaling around 12 million people. This will cost P33.1 [billion] per — for the first year,” he said.
Dominguez said his office’s proposal is “sustainable” and “something that we can afford as of this time”.
The recommendation of Dominguez was approved by Duterte.
“So sige, ‘yun ang policy ng executive department (fine, that would be the executive department’s policy),” Duterte said.
