Drilon warns of repercussions with higher excise tax on fuel

Senate minority leader Franklin Drilon on Tuesday warned lawmakers again on the possible repercussions of imposing a higher excise tax on fuel as this would affect basic services and commodities in the long run.

Drilon, who is part of the Senate contingent in the bicameral conference committee of the proposed Tax Reform for Acceleration and Inclusion (TRAIN) bill, said prices of basic commodities are expected to shoot up should the version of the House of Representatives on the tax reform bill prevails over the Senate form.

“Because the House version would tax them (jeepney drivers and operators) on January 1, 2018 an additional excise tax of P3.00; in 2019 an additional of P2.00; and in 2020 an additional P1.00 for a total of P6.00,” Drilon said.

Drilon said the Senate version would also have P6.00 increase but slightly different in distribution in order to cushion the impact of additional excise tax.

“On year 1, you increase the excise tax on fuel by additional P1.75; on year 2, you increase it by P2.00 so it become P3.75; and on year 3, it becomes P6.00. That’s how we structured it. I can’t remember exactly how much it will generate but in any case, this is the main source of the recovery of the reduction of P152 billion from the lowering of the income tax rates,” the minority leader said.

“That’s where the debate starts. We should be very careful because increasing the excise tax on fuel has inflationary tendencies; in other words, tataas ang presyo ng pangunahing bilihin,” he added.

Drilon said it has been estimated that inflation will go up by about 0.9 percent. “Right now it’s about 3.5 percent and it will go up to 4 percent. So tataas ang presyo ng pangunahing bilihin,” the senator pointed out.

He said the best thing lawmakers can do is to at least minimize the imposition of additional tax on fuel or, at least, impose it on cigarettes and liquor.

“The House also included on third and final reading tax on sugar. Again this is a bone of contention. This is argued also as a health measure but others have disputed it,” Drilon said.

“Generally, like the Sin taxes, we support it as a health measure as long as it excludes certain items such milk, 3-in-1 coffee mix or instant formula because these are the ones consumed by many our citizens, particularly the poor,” he said.

Asked if he believes the proposed tax reform program of the Duterte administration is poor, Drilon said it is certainly not progressive that is why some senators insist on earmarking the revenues.