Budget chief insists on fuel tax hike suspension
The Department of Budget and Management (DBM) is firm on following the recommendation of the administration’s economic team to suspend the second tranche of fuel excise tax hike next year despite the recent decline in the prices of Dubai crude.
In an interview, Budget Secretary Benjamin Diokno said the government should stick to its decision to suspend the next increase in fuel excise tax.
“For me, there should still be a cut. That’s the policy. Unless we change it, that is still the policy,” Diokno said on the sidelines of the 2018 Philippines Investment Forum in Makati City.
The budget chief also dismissed calls to review the recommendation to defer the next tax hike, adding the proposal should still stand even if Dubai crude oil prices fall below $80 per barrel for the rest of the year.
Earlier, the Department of Finance (DOF) stressed it was keeping its recommendation to suspend the scheduled adjustment in petroleum excise tax in January.
“The recommendation to suspend stands. We are anticipating a formal announcement from OP,” Finance Assistant Secretary Antonio Lambino said. OP stands for Office of the President.
Socioeconomic Planning Secretary Ernesto Pernia had been quoted as saying in several news reports that the proposed suspension should still be reviewed.
Meanwhile, Finance Undersecretary Gil Beltran said in a separate interview that the proposed fuel excise tax hike suspension is estimated to result in a net loss of P27 billion.
He said that while there would be P41 billion in foregone revenues from the suspension, the government may still recover P14 billion in additional value-added tax (VAT) collections due to higher oil prices.
“We will lose P41 billion from excise, but we will gain P14 billion from the VAT. So there’s a net loss of about P27 billion,” Beltran said.
To compensate for the losses, Beltran said the government is considering cutting some nonpriority expenditures, such as travels, renovations and purchase of motor vehicles.
He said the DBM can also cut the Miscellaneous Personnel Benefits Fund by not approving additional positions or appointments made by agencies.
Short-changed
As consumers continue to reel from high prices of consumer goods, Sen. Grace Poe said she feels the public has been “double-crossed” by economic managers who pushed for TRAIN.
Poe, one of 17 senators who asked President Duterte to support calls for suspension of further increases in excise taxes on diesel, gasoline and other petroleum products for 2019 and 2020, said the promise of the DOF to roll out mitigating measures to cushion price spikes came too late.
“With the way that they (DOF) are implementing it, the failure to be able to deliver on certain promises and programs of the government, of course I feel that we’ve kind of been double-crossed,” Poe said.
“Because we wanted to support the President, on his appeal that we need money to be able to push for programs. OK, we’re there but then there are also provisions there that said to cushion the taxes, the poorest of the poor should be able to benefit from the collection,” she said.
She said the government has yet to complete the rollout of the unconditional cash transfer for 10 million poor families and cash subsidies for drivers of public utility vehicles as mandated by the TRAIN law.
The DOF earlier said it would be implementing the measures as soon as the TRAIN implementation began in January this year.
Ilocos Norte Gov. Imee Marcos, for her part, is pushing for the immediate one-year suspension of the value added tax on basic food commodities, fuel and electricity to address the record-high inflation burdening ordinary consumers.
Marcos, who is running for senator in the 2019 midterm polls, said a combination of substitute measures can offset the expected revenue loss from her proposed VAT suspension.
“The temporary lifting of the VAT on basic commodities will provide urgent muchneeded relief to Filipinos as inflation hit the hardest in the countryside. The poor Filipinos cannot wait for antiinflation strategies that could take months to work. They need solutions now,” she said.
“A combination of 10 percent improvement in income tax collection, higher absorptive capacity or much less agency underspending and three other measures can generate P362 billion in revenues. That would replace the VAT that would be missed,” she added.
Bureau of Internal Revenue figures show that if income tax collections grow by just 10 percent, the government can earn at least P102 billion in 2018 and P113 billion in 2019.
The DOF earlier said basic food items such as rice, fish, meat and vegetables have been major drivers of inflation this year, with the contribution of rice alone rising 10 times to one percentage point of the inflation rate.
Data from the Philippine Statistics Agency showed rice was the number one contributor to inflation in September 2018, and that food items in the consumption basket accounted for more than half of the inflation rate in the same month.