Tuesday, February 28, 2017

Gov’t eyeing P807.4-B revenues from increase in fuel excise taxes

Published February 17, 2017, 7:00 PM By Myrna M. Velasco

The government is eyeing to raise an aggregate P807.4 billion revenues from the proposed increase in excise taxes of fuel products in about five years of the Duterte administration, according to Finance Secretary Carlos G. Dominguez III.

In a roundtable discussion with Manila Bulletin editors, he disclosed that the extent of anticipated incremental revenues from adjusted fuel taxes would be P36.1 billion for the second half of 2017; P120.9 billion for 2018; P147.2 billion for 2019; P156.9 billion for 2020; P167.6 billion for 2021; and P178.7 billion for 2022.

A supporting study from the Department of Finance (DOF) has reckoned the calculations from the level of fuel taxes in year 2015, in which collection reached P28 billion.

Revenues from fuel taxes, it was noted, had accounted for 0.2-percent of the country’s gross domestic product (GDP). Of the total excise tax collections, P13.3 billion came from the Bureau of Internal Revenue (BIR); while P14.7 billion had been from the Bureau of Customs (BOC).

As propounded by the finance department in a pending legislative measure, the staggered increase in excise taxes for diesel will be as follows: P3.00 per liter for the second half of 2017; P5.00 per liter for 2018; P6.00 per liter for 2019; and P6.24 per liter for year 2020. It will be coming from zero percent level at present.

For gasoline products, the increments in excise taxes would be P4.35 per liter for 2016 and first half of 2017; P7.00 per liter for second half of 2017; P9.00 per liter for 2018; P10.00 per liter for 2019; and P10.40 per liter for 2020.

It was further proposed that there shall be “annual indexation of 4.0-percent starting 2020.” Nevertheless, the DOF qualified that “there shall be no indexation for the year if the average Dubai crude oil price in the month preceding the scheduled indexation exceeds US$100 per barrel.”

The finance department added that it had been 20 years already “since the last time the tax was increased.”

It emphasized that “the low oil price regime will stay in the medium term due to the slow growth of China; and the large supply of shale oil.”

Once passed into law, the oil companies noted they will just pass on the cost impact of the adjusted fuel excise taxes at the pumps.

Meanwhile, the trade and industry and finance departments have agreed to protect the small cars priced P1 million and below with very minimal excise tax rate of 1 to 3 percent.

Trade and Industry Secretary Ramon M. Lopez told reporters they have a unified position with the DOF to secure the small cars or motor vehicles sold for P1 million and below with a small tax adjustment of 1 to 3 percent only.

“We’re aligned with the DOF, they listen to our proposal for lower excise tax on small cars,” he said noting that this price bracket, which accounts for the bulk of auto sales, will also ensure revenue generation for the government.

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