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