By Atty. Howie Calleja
The current excise tax rate is around P10 per liter for gasoline, P6 per liter for diesel, P5 per liter for kerosene, and P3 per liter for liquefied petroleum gas (LPG); and a suspension of such excise tax and VAT on fuel products is unlikely under the administration of President Ferdinand R. Marcos, Jr., according to the Finance chief, Sec. Benjamin E. Diokno.
Economic managers have strongly opposed such suspension because they would argue that the primary beneficiaries of the fuel excise tax and VAT suspension would actually be the top 10 percent of the country’s households, as they are estimated to use up around 48.8 percent of the Philippines’ total fuel consumption per year, while the bottom 50 percent will only consume around 13.9 percent. This means that with the suspension of fuel excise taxes and VAT, we are supporting higher income households more than lower income households.
As such, the proposal is for the government to continue providing targeted relief to vulnerable sectors, which would include extending a total of P33 billion in unconditional cash transfers (UCTs) to the bottom 50 percent of all households, or about 74.7 million Filipinos. Is this a sound course of action?
I am not an economist but from an ordinary Filipino’s worldview the suspension of excise tax and VAT on fuel will not only benefit private car owners and PUV drivers but will translate to benefits for other businesses as well which are exceedingly dependent on petroleum and transportation such as the agriculture and tourism industry.
We should also look at the entire perspective on a situation or issue. It is not a solitary sector which is affected. There are other industries that rely heavily on transportation and the obstructive costs of fuel will surely result to price hikes in other businesses and trades. The sure effect will be the mounting costs of energy and other necessities especially food products. “Ayuda” (cash aid) might not be enough when the prices of other crucial day-to-day provisions are affected by the oil price hikes
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To quote former Senate Minority Leader Franklin M. Drilon, “we are not seeking an exemption from taxes here and therefore a strict construction of the law is misplaced. Filipinos are suffering. The burden should be borne by the government. The government cannot just stand and hide behind the law to say that there is nothing that can be done. We cannot wait for the law to be amended before we act. The situation is changing rapidly by the day and we need to act fast”.
If the BIR was able to suspend the imposition of 12% VAT on exporters’ purchases after vehement objection from exporters, domestic suppliers and stakeholders, with the BIR qualifying, that the postponement is solely due to the COVID-19 pandemic. Why can’t we do the same on excise taxes and VAT on fuel? The option to suspend taxes would benefit us all vis-à-vis the current option of giving “ayuda” on gas cards to the transport sector which only benefits the transport sector. Moreover this “socially targeted” solution without its real beneficial effect is only prone to corruption without stringent oversight.
Aanhin pa ang damo kung patay na ang Kabayo? (“What good is the grass if the horse is already dead’.) What good are all our efforts to revive our economy, when in the end many Filipinos have already suffered and died? Our government should give our compatriots some ‘breathing space’ amidst our socio-economic woes. This is a temporary fix but it will be welcomed as most of us are all just trying to get back on our feet.
