Higher fuel tax gains support

Sectoral leaders and a former finance minister have expressed support to the Department of Finance (DOF) -backed comprehensive tax reform proposal including the adjustment in fuel excise.

In a statement, the DOF said former Finance Secretary Margarita Teves, Action for Economic Reforms (AER), and the Tax Management Association of the Philippines (TMAP) are supporting House Bill (HB) 4774.

The nonprofit research group International Tax and Investment Center (ITIC), based in Washington, also backed the fuel excise tax hike.

HB 4774, a bill filed in the House of Representatives last month, is anchored on sizable cuts in personal income tax (PIT) rates.

“Strictly on the proposed excise tax on fuel products, I support the staggered increase as proposed by the Department of Finance,” said Teves, an economist who was DOF secretary during the Arroyo administration and a former lawmaker.

AER Economist Jo-Ann Latuja Diosan also backed bill, saying taxes on petroleum products “is not just about compensating for the loss from the personal income tax reform but also, together with other excise taxes, is the most effective way in the generation of domestic resources.”

“After all, the burden of taxation on petroleum falls mainly on the richest 10 percent of the population,” she said.

Wayne Barford, senior advisor of the ITIC also said at the hearing that “on petroleum, we support the recommendations from the DOF.”

“We support the approach of the DOF. We look forward to good tax reform in the Philippines,” he added.

TMAP President Maria Lourdes Lim said the proposed oil excise tax adjustment “is a compensating revenue measure that would not adversely have an effect on poor and marginalized sectors of the society because fuel prices are expected to be low in the next several years.”

Teves and Lim separately suggested that the panel consider indexing the fuel excise tax to the actual inflation rate by 2020, rather than imposing a flat rate of 4 percent.

Lim also said that “in terms of indexation, this should be based on inflation.”

Teves’ support brings to 20 the number thus far of former top officials of the DOF and the National Economic and Development Authority (NEDA) who have publicly thrown their support behind the DOF-proposed CTRP. (CSL)