Gov’t to lose 1102B from fuel tax suspension — DOF

The national government will lose bulk of its revenue gains from the first tax reform law should the proposed suspension of fuel excise taxes is implemented next year, the Department of Finance (DOF) warned.

Based on the DOF estimates obtained by Manila Bulletin, Senate Bill (SB) No. 1798, which seeks to suspend excise taxes on fuel under the Tax Reform for Acceleration and Inclusion (TRAIN), will result in 1101.8 billion in foregone revenues in 2019 alone.

If Senator Paolo Benigno A. Aquino IV’s SB 1798 is passed into law, the excise tax on petroleum under the TRAIN law will be automatically suspended once the average rate of increase in consumer prices surpasses the inflation target over a three-month period.

The projected loss from SB 1798 is equivalent to 70.6 percent of the 1144.2 billion expected revenues from TRAIN next year.

Finance Secretary Carlos G. Dominguez III earlier rejected the proposals to suspend the implementation of the TRAIN law that governs the excise tax on petroleum products amid skyrocketing prices.

Dominguez explained the TRAIN law has several social mitigating measures to counter impact on inflation.

Among these measures are unconditional cash transfer, fuel vouchers for public utility jeepneys and national ID program for efficient distribution of subsidies to the poorest of the poor households.

The government has already disbursed 12,400 to 4.2 million Pantawid Pamilyang Pilipino Program also known as 4Ps beneficiaries as of May this year. The DOF wants 10 million families to benefit by September 2018.

The Department of Transportation, meanwhile, is about to release 1977 million for the implementation of the fuel vouchers to compensate for the increase in petroleum costs.

The national ID, on the other hand, was already ratified by Congress and is expected to be transmitted to President Rodrigo R. Duterte within this month.

Finance Undersecretary Karl Kendrick T. Chua earlier said that TRAIN only accounted for 0.4 percentage point of inflation.

In particular, Chua noted that the additional excise tax on oil and oil products arising from the TRAIN accounted for only 0.2 percentage point.

Oil prices abroad rose because of unexpected geopolitical and global economic factors affecting supply like lower production from Venezuela, the potential US sanctions on Iranian oil exports, voluntary output cuts by the oil cartel and Russia, Chua said.