DOF nixes fuel excise tax suspension, proposes P200 monthly aid to poor families
MANILA, Philippines — The Department of Finance is not recommending the suspension of excise tax on fuel products despite rising prices, saying the government should instead provide P200 per month per household for one year to poor families.
Finance Secretary Carlos Dominguez III on Wednesday, March 16, 2022, said this is a more equitable response to the spate of oil price increases than suspending excise tax on fuel, which would only benefit “richer people” who have cars.
“Cutting the tax will benefit more the people who have cars and they are the richer people. We will not be benefitting so much the bottom 50% of our population. That will make it very inequitable,” he said in a briefing with President Rodrigo Duterte.
Dominguez said the government should instead provide “targeted relief to the most vulnerable sectors,” the funds for which will be sourced from additional revenue from the value added tax (VAT) from fuel products.
He said the government is expected to collect an additional P26 billion of VAT on fuel, if prices will be at $110 per barrel.
“Our recommendation is to use this extra money to subsidize the poorer sections of our society. We will have an additional P26 billion that we can distribute directly,” he said.
The aid will be through unconditional cash transfers worth P200 per month or P2,400 per year to the bottom 50% of all Filipino households, Dominguez explained.
He said this will cost the government P33.1 billion, which is a “little more” than the expected additional revenue from the VAT on fuel.
“We realize that this is not enough, but this is what we can afford as of this time. To make sure that our finances going forward, especially for the next administration, are still going to be healthy. This, I believe, is what we can afford,” Dominguez said.
“This is sustainable. This is something we can sustain and afford as of this time,” he added.
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