NGO wants tax reform gains used for clean transport

A NON- GOVERNMENT organization (NGO) wants the government to use additional revenue generated by the tax reform program to invest in low carbon-emitting public transport systems.

“We support the utilization of a significant portion of the revenues from the fuel excise tax reforms to fund transport-related projects. We highly encourage the Philippine government to instate a mechanism that would ensure that the revenues will be used for projects that promote eff iciency and sustainability in the transportation sector, such as low emissions public transportation projects,” said Clean Air Asia Executive Director Bjarne Pedersen in a statement.

The organization said that raising the excise taxes on fossil fuels and automobiles would temper health costs generated by air pollution.

It noted that automobiles account for about 90% of the aggregated discharged amounts of air pollutants in the region.

Finance Secretary Carlos G. Dominguez III said earlier that the P162.5 billion net revenue from the tax reform will be used to co-fund infrastructure projects for next year.

State think tank National Tax Research Center (NTRC) said in a report that the measures in the tax reform program could also be an environmental measure, aside from generating more government revenues.

“[The tax reform] will partially recoup the cost of the damage brought about by the production, transportation, storage and use of petroleum-derived fuels on the environment. As people will tend to drive less or make more prudent use of fuel oil products in response to higher prices, there will be reduced pollution emissions and less road and bridge damages,” said the NTRC.

“More prudent use of vehicles will also result in traffic decongestion. There is also a need to index the rates to inflation and adjust them to their present values on a regular basis to preserve the real excise tax burden,” it added.

The NTRC said that restructuring the excise rates of automobiles would bring the tax system on par with those of the region, considering the country has the lowest rate.

Excise taxes on automobiles in the Association of Southeast Asian Nations (ASEAN), range from a minimum of 5% up to 125%, depending on car prices. The Philippines on the other hand has a 2% excise tax rate for the lowest bracket, and 60% for the top price bracket.

In the first package of the tax reform, rates in the four-tiered tax structure for automobiles will be raised more than twice, depending on the net manufacturing price or importer’s selling price, as well as increasing the base excise tax per bracket.

Meanwhile, a three-tranche P6 hike will be imposed on fuel, with P3 taxed on the first year, an additional P2 on the second year, and finally P1 on the third year of implementation.

The NTRC added that despite hiking the rates, buying a car in the first and second brackets will still be affordable for a middle-income employee, as buyers would have increased income from the lower personal income tax rates.

“On the other hand, the significant increase in the proposed marginal tax rates ranging from 100% to 200% on high-priced automobiles under the third and fourth brackets will enhance the progressiveness of the tax and is justified on the ability to pay of potential buyers,” it added. —