FINANCE Secretary Carlos Dominguez on Monday confirmed that the excise tax on fuel would be increased to P10 per liter from P4.35, and that would result in a one-peso increase in transport fares.
Under questioning from Reps. Edcel Lagman, Antonio Tinio and Rodel Batocabe, Dominguez also said the value-added-tax exemptions on goods and services and zero-rated transactions would be lifted and the VAT base expanded.
“The increase in excise taxes would be imposed to offset the P173.8 billion in foregone revenues that would result from the lowering of the personal income tax and corporate tax,” Dominguez told the House committee on appropriations led by Rep. Karlo Alexei Nograles.
The exchanges took place as the House began its deliberations on President Rodrigo Duterte’s first P3.35-trillion national budget for 2017.
Dominguez said the P173.8 billion in forgone revenues would result once the corporate tax rate was reduced to 25 percent from 30 percent, and the individual tax rate to 25 percent from 32 percent.
“The rationale behind reducing the tax rates is to make them competitive with our neighbors,” Dominguez said.
He made his statement even as House leaders on Monday vowed to scrutinize the plan of the Duterte administration to lift the VAT exemptions on food, medicine and education and to adjust the excise tax on oil products to inflation.
Nograles, chairman of the House committee on appropriations, said the House had yet to receive a proposal from Dominguez who confirmed during the budget deliberations on Monday the planned lifting of the VAT exemptions on certain products.
“We will have to wait for the proposal of the Department of Finance and upon receipt of the proposal we will study it,” Nograles said.
Rep. Gwen Garcia said the Lower House would first have to receive the proposal from Finance before it could comment on the issue.
Dominguez said the reduction of the personal income tax of wage earners and those in the middle-income bracket would result in the loss of P139 billion in foregone revenues, while the reduction of the corporate tax would result in the loss of P34.8 billion.
“The petroleum excise tax to inflation has not been adjusted since 1997, thus the [proposed] increase in the tax on fuel to offset the losses to be incurred in the lowering of the income tax and corporate tax,” Dominguez said.
He insisted that the VAT and excise taxes were not new tax impositions as those would just be expanded to provide relief to the low-income families and the poorest of the poor.
He said the professionals such as doctors, engineers and lawyers would also be made to pay their taxes religiously to stamp out inequality.