DOF vows im­pact of fuel tax hike ‘min­i­mal, man­age­able’

Manila Bulletin - - Business News - By CHINO S. LEYCO

The De­part­ment of Fi­nance (DOF) as­sured that the pro­posed hike in fuel taxes would have min­i­mal and man­age­able im­pact on con­sumers as the agency is also open to di­a­logues with the trans­port groups.

In a state­ment, Fi­nance Un­der­sec­re­tary Karl Ken­drick T. Chua said yes­ter­day that the im­pact of higher fuel levies will be felt more by af­flu­ent house­holds that con­sume around 50 per­cent of the coun­try’s oil sup­ply.

Chua also clar­i­fied that the DOF’s pro­posal is to ad­just ex­cise tax on diesel by about R6 per liter, not R10.

But to re­duce the ef­fect of the tax ad­just­ment on vul­ner­a­ble sec­tors, Chua said the govern­ment plans to im­ple­ment tar­geted cash trans­fers to off­set the would-be slight in­crease in trans­port and food prices on the poor­est 50 per­cent of house­holds.

The govern­ment will also help the trans­port sec­tor and com­muters by rein­tro­duc­ing the Pantawid Pasada Pro­gram, and help pub­lic util­ity jeep­neys (PUJs) mod­ern­ize their en­gines to be more fuel ef­fi­cient, he said.

For in­stance, jeep­ney driv­ers ply­ing the Es­paña Boule­vard (Manila) to Project 2-3 (Que­zon City) route spend some R700 a day in fuel and earn around R2,000. With the higher diesel ex­cise tax, they will spend an ad­di­tional R150, Chua noted.

“How­ever, this will have min­i­mal ef­fect on their in­come and on fares once the tar­geted trans­fer, the Pantawid Pasada, and the jeep mod­ern­iza­tion pro­gram are im­ple­mented,” Chua said.

For ex­am­ple, Chua said the jeep mod­ern­iza­tion pro­gram can po­ten­tially re­duce fuel con­sump­tion by R350 pe­sos (or a 50 per­cent im­prove­ment) while the Pantawid Pasada can keep any fare in­crease to a min­i­mum.

“With higher take-home pay due to lower in­come taxes un­der the tax re­form pro­gram and the cash trans­fer to the poor and vul­ner­a­ble, the ef­fects of the slight in­crease in fares can be less­ened fur­ther,” Chua said.

He also cor­rected mis­con­cep­tions that higher fuel taxes would drive up food prices.

The of­fi­cial pointed out that from Jan­uary to De­cem­ber, 2016, diesel prices in­creased by R10 per liter, rep­re­sent­ing a 50 per­cent in­crease from around R20 to R30.

“How­ever, food in­fla­tion in­creased by only 3.6 per­cent and overall con­sumer prices by just 2.6 per­cent. This is be­cause the econ­omy is well man­aged and peo­ple are ben­e­fit­ing from growth in the form of higher in­come and wages,” Chua said.

On Fri­day morn­ing, a hand­ful of peo­ple staged a brief protest against the pro­posed fuel tax hike in­front of the DOF com­pound in Manila.

Chua and other DOF ex­ec­u­tives planned a di­a­logue with the pro­test­ers, but it did not take place af­ter they im­me­di­ately left area min­utes af­ter they started.

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