The Department of Finance (DOF) remains firm in its position not to suspend the collection of taxes on oil products despite clamor from all fronts, noting it will result to inequity and will hurt the economy in the long run.
DOF assistant secretary Paola Alvarez at the Laging Handa public briefing on March 15 said revenue foregone from a proposal on the automatic suspension of fuel excise tax collection when crude hits $80 per barrel is estimated at P1.5 trillion until 2032.
Also on March 15 the House of Representatives, the committee on energy approved a measure seeking to amend Republic Act 8479 or the Downstream Oil Industry Deregulation.
Act of 1998 by unbundling the retail prices of domestic petroleum products and institutionalizing the minimum inventory requirements for petroleum products to ensure supply security.
Alvarez said the government is focused on providing subsidies to the most affected sectors instead of letting go of tax collections that could amount to as much as P138.8 billion just for the year alone.
Alvarez said under the present tax arrangements, those who consume the most oil products are the ones that should bear the brunt of the spike in oil prices.
Alvarez noted that 48.8 percent of oil products are consumed by high-income households while the low-income households consume just 13.8 percent of the oil pie.
Alvarez said with the current setup, any tax collected on oil products provides funding for subsidies distributed to beneficiaries as well as financing for infrastructure and social services.
Government has raised P3 billion of the planned P5-billion subsidy for public utility drivers under the Pantawid Pasada program while a P1.1 -billion subsidy is being eyed for farmers.
If pending bills are passed, Alvarez said it would mean a loss of P48.7 billion in tax collection under the House Bill 1448 that calls for the suspension of excise tax on oil between June and November this year, and P69.3 billion under Senate Bill 2445 which calls for excise tax suspension between June and December this year.
A suspension on the collection of all taxes that include value-added tax, on oil products would mean foregoing P138.8 billion in one year, equivalent to 0.6 percent of the country’s GDP. (Malaya Business Insights News)
