Monday, July 18, 2016

Higher fuel excise tax pushed



posted July 17, 2016 at 11:57 pm by Gabrielle H. Binaday

The Finance Department will likely push through with a plan to increase the excise tax on fuel products amid the slump in global oil prices.
Finance Secretary Carlos Dominguez III told reporters it was about time to adjust petroleum taxes following the soft oil prices in the world market. 
“Besides, now is the time to do it, because the price [of fuel] is low,” Dominguez said. 
The DoF is studying several proposals to raise fuel taxes. 
“We have to [adjust], because [the last adjustment] was set in 1997. It’s P4.50, something like that since then. P4.50 then [is] not worth as P4.50 right now. So we have to adjust it, at least to index it,” he said. 
Petroleum products are taxed in varying rates, ranging from an exemption to P4.50 per liter.
The government has not made any upward adjustment in excise tax rates since 1997 and they have been fixed in nominal terms, reduced or eliminated.
Earlier, former Finance Secretary Cesar Purisima recommended a Comprehensive Tax Reform Program that ncluded an increase in excise tax on gas, diesel and other oil products. 
Purisima noted that the proposal might generate around P132 billion in revenues. 
Purisima’s proposal would generate additional revenues of P132 billion if the current excise tax on gasoline was raised to P10 per liter and that of diesel to P6 a liter. 
Purisima said the P10 per liter rate was derived by indexing the existing excise tax rate of gasoline of P4.35/liter by cumulative inflation factor of 2.37 (1997-2014) and applying the same amount of increase (P5.96) to diesel. 
“For simplicity and administrative ease, the P5.96 was rounded off to P6,” Purisima said. 
His proposal calls for the indexing of the excise tax by 4 percent every year. 
The same recommendation called for a subsidy if global crude oil prices reached over $90 per barrel.

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