MANILA – Value added tax (VAT) collections from petroleum products are expected to partially compensate for lost government revenues arising from a suspension of the oil excise tax hike scheduled for 2019.
Finance undersecretary Gil Beltran told reporters Friday that although the government is projected to lose about P41 billion from the expected suspension of the second installment of the tax increase, the actual loss will not be that big. “We will lose P41 billion from excise but we will gain P14 billion from the VAT, so there’s a net loss of about P27 billion,” he said.
The Department of Finance (DOF) official also said a task force will be created to look into proposed programs that can be postponed or cancelled, to limit expenditures and ensure that the budget gap will still be about 3.2 percent of the gross domestic product (GDP). “One of the things we are looking at is the less priority expenditures like the travels, which are not very necessary, and some renovations,” he said.
Beltran added that the Department of Budget and Management (DBM) may opt to disapprove some appointments by the bureaucracy since funds for miscellaneous personnel are costly to the government. “They have control over the appointments in the bureaucracy so they have the option not to approve certain appointments by the bureaucracy,” he said.
“We can look also for efficiencies elsewhere. We usually get at least 0.2 percent additional efficiency from collection,” he added.
Economic managers have recommended the suspension of the second tranche of the excise tax hike, which is under the Tax Reform for Acceleration and Inclusion (TRAIN) law, after global oil prices have breached the USD80-per-barrel mark. Under TRAIN, implementation of the excise tax increase may be suspended for 2019 if the average price in the last three months of this year stood at USD80 per barrel.
Beltran cited earlier statements by economic managers that any tax hike suspension is subject to review next year, in view of forecasts that world crude prices would soften in 2019. (PNA)
