Gov’t eyeing ₱83 B from oil VAT, excise taxes this year

With global oil prices now on the rise, the government is anticipating that it could fetch as much as ₱83 billion revenues this year from the value added tax (VAT) and excise taxes being levied on petroleum products.

That has been anchored on the calculations of the Department of Energy (DOE), factoring in targeted sales volume as well as the extreme demand crunch suffered by the industry in the more than two months of enhanced community quarantine (ECQ) enforcements due to the coronavirus pandemic.

Taxes being administered on oil products are three-tiered: VAT, excise taxes under the Tax Reform for Acceleration and Inclusion (TRAIN) Act and the most recent was the temporarily hiked 10percent import duty on crude and knished petroleum products. The last one could bring in additional ₱6.8 billion proceeds for the State coffers.

But since the oil and gas industry was literally pummeled during the lockdown periods and many consumers are in economic tribulation, it is deemed that the multi-layered tax impositions may already be akin to squeezing blood from stone.

For excise tax collections, the energy department estimated that this would reach ₱50.941 billion this year; while revenues from VAT imposition on oil commodities will rake in ₱31.90 billion.

Within the month of May, the projected excise tax revenues could hover at ₱3.264 billion and will be ramped up to ₱4.824 billion by June.

Around July, that will inch up to ₱5.938 billion; then it will be escalating to ₱7.383 billion per month from August to December or what the department refers to as pre-Covid level.

Volume of sales in April and May exceptionally dipped by 50 to 60-percent, at just 78.864 million liters for gasoline compared to pre-Covid level of 306.345 million liters in January; diesel at 268.727 million liters in April and May vis-à-vis 340.205 million liters in January.

Starting January this year, the TRAIN-mandated excise tax for gasoline products had gone up to ₱10 per liter; diesel at ₱6.00 per liter; kerosene at ₱5.00 per liter; and household liqueked petroleum gas (LPG) at ₱3.00 per kilogram.

For the 12-percent VAT on petroleum products, targeted revenues for May had been pegged at ₱2.186 billion; then it will climb higher to ₱3.243 billion in June; and would escalate further to ₱3.991 billion in July.

In the succeeding months of August to December, the scale of revenues on a monthly basis had been targeted at ₱4.496 billion, with the DOE’s Oil Industry Management Bureau (DOE-OIMB) citing the same reason on oil demand recovery as a key factor for higher tax collections.

The oil sector, along with the power industry, had been among the major sources of revenues for the government on its cash buildup for infrastructure projects as well as social services primary for health, livelihood and education.