Oil excise collections reach 3-year high in Sept

Prinz Magtulis (The Philippine Star) - January 13, 2017 - 12:00am

http://beta.philstar.com/business/2017/01/13/1661821/oil-excise-collections-reach-3-year-high-sept

MANILA, Philippines - Revenue from excise taxes on oil surged in September last year, the highest level in three years, the Department of Finance (DOF) reported yesterday.

A total of P1.31 billion was collected in September, up more than a fifth from P1.09 billion in the same period a year ago, data from the Bureau of Internal Revenue showed.

The figure was the highest monthly collection since the latter part of 2013.

While the trend showed collections are increasing, Finance Undersecretary Karl Kendrick Chua said the government is actually losing P145 billion every year from a 12-year-old excise tax rates.

“Tax administration reforms are not enough to raise adequate funds to bankroll the Duterte administration’s agenda of high and inclusive growth,” Chua said.

“(This is) given the inherent flaws in the country’s tax system that require urgent correction such as the non-indexation of tax rates to inflation,” he said.

According to the National Internal Revenue Code, oil excise taxes are fixed charges on the manufacture or import of petroleum to the country, depending on the quantity per liter.

This means collections are not affected by either rising oil prices in the global market or the weaker peso now at 49-to-a-dollar level. The Philippines buys the bulk of its oil requirements from foreign sources.

“Demand (for oil) has become significant in recent years due to the sheer size of the growth of the motorists,” said Emilio Neri Jr., lead economist at Bank of the Philippine Islands.

The Duterte administration is proposing to hike gasoline excise taxes from P4.50 per liter to P6 and impose the same on the currently exempted diesel products.

This has met strong opposition from Congress which said it would hit the poor, particularly public utility vehicles. Chua reiterated “vulnerable groups” would be supported by counter measures.

These include the revival of Pantawid Pasada program for fuel credits and discounts as well as cash transfer to the poorest 50 percent of households.

Oil excise hike and support mechanisms are part of the first package of the comprehensive tax reform program stuck unnumbered in Congress.

“With higher revenues from the oil excise tax reform, we can fund the massive public infrastructure program that is needed to reduce traffic congestion, improve connectivity, and raise the economic productivity of Filipinos...,” Chua said.

Neri, however, said this may not be necessarily the case.

“Oil excise taxes are inelastic, which means this will not necessarily result into lower car purchases,” he said in a phone interview.

The DOF is also preparing higher excise levies for automobiles on one of its tax reform packages.

“Definitely, raising oil excise taxes is a key element, a significant contributor to the tax reform. But I don’t think it will make or break the chances of other tax amendments,” Neri said.