Duterte retains fuel taxes, to give P200 a month to poor families

PRESIDENT DUTERTE has rejected proposals to suspend fuel excise taxes, but approved a P200 a month cash aid to poor families amid the soaring prices of petroleum products due to the Russo-Ukrainian war.

Finance Secretary Carlos Dominguez III recommended retaining the fuel excise tax collection, saying it will benefit at least 12 million people from low-income households in the country.

Dominguez also refuted claims that suspending the collection of fuel excise tax will help soften the impact of the oil price hike, saying this will instead cause more harm than good. “If we suspend this, and we don’t collect it, what will happen is our debt-to-GDP ratio will go up from an estimated 7.7% to 8.2%. And it will mean that if we — if we continue to spend the same amount of money, we will have to borrow more money and the amount of — and that will bring up our debt-to-GDP (Gross Domestic Product) ratio by — to about 61.4%,” he said.

According to Dominguez, if the tax on fuel is reduced, it will only benefit the top 10% of income earners in the Philippines, which consume almost 50% of all the fuel. “In other words, if we — and if we look at the top — bottom 50% of the Philippines, they only consume 13% of the fuel,” he said.

Continuing the collection excise tax on fuel will therefore soften the impact for all sectors, making the measure very equitable for all Filipinos and not the country’s top earners and car owners, he said, adding apart from the poor sector, the excise tax on fuel imposed under Tax Reform for Acceleration and Inclusion Law will also provide the budget for the salaries of state workers and help fund infrastructure developments in the country.

“Tax collections from fuel will provide the budget for target subsidies of 200 per month per household from the lower 50% of the Filipino population or roughly 12 million individuals, amounting to 33.1 billion per year,” Dominguez said.

National Economic and Development Authority (NEDA) Director General and Socioeconomic Planning Secretary Karl Kendrick Chua also agreed with Dominguez and even recommended three measures to curb the effects of inflation - providing targeted relief to vulnerable sectors, doing unconditional cash transfer, and promoting energy conservation through the implementation of 10-hour, four-day work week.

He said shortening the regular work week to just four days would reduce work commute and help the government manage the economy, adding a similar measure was also implemented in 2008 in a bid to cushion the impact of rising fuel prices.

Under NEDA’s proposal, public utility vehicle drivers will receive service contracting subsidies of at least P6,500 per month for two months. (Mark Navales and Malou Cablinda)