A CABINET official expressed relief after proposed tax measures to increase taxes on petroleum products were allegedly not included in the President’s legislative agenda to be submitted to Congress.
Members of the President’s economic team, however, played down these pronouncements, which were “highly unlikely.”
In a statement, Presidential Commission for the Urban Poor chair Terry Ridon said the proposed tax measures on raising the excise tax on petroleum products were not among the legislative measures presented by the Presidential Legislative Liaison Office, which sought to consolidate bills to be submitted to the President as priority measures in Congress.
“We have reason to believe that new tax measures will not be included in the President’s legislative agenda, and for that we are thankful,” Ridon said.
“The PCUP stated its objections in the meeting, as we believed that higher taxes on petroleum products would severely affect our transport and informal sectors, and revoking tax privileges for our seniors would further disadvantage an already marginalized sector,” he added.
Aside from increased taxes on petroleum products, Ridon said the inter-agency meeting also junked proposals on the revocation of senior citizen tax privileges, turned down by the Finance department as early as August when it reviewed the lifting of VAT exemptions, adjusting for inflation of the tax on fuel, and rationalization of fiscal incentives.
The economic cluster maintained that excise tax on petroleum products should be raised amid “anti-poor” criticisms, claiming it would escalate food prices and other prime commodities.
Finance Secretary Carlos Dominguez III, however, pointed out that “contrary to the common perception that fuel excise tax increases would affect the poor the most, DoF studies show 60 percent of petroleum products are consumed by the top 10 percent of the country’s top income earners.”
“In fact, the top 200,000 households [in terms of salaries and income] consumed 20 percent of the fuel products,” he said.
Budget Secretary Benjamin Diokno brushed off Ridon’s claims on scrapping the economic team’s proposal for higher taxes on petroleum products, seen to compensate for the planned reduction in personal and corporate income tax rates.
“[It’s] highly unlikely, since the higher excise tax on petroleum products is a major counter proposal to mitigate the revenue loss due to corporate and income taxes,” Diokno told Manila Standard.
The government is looking at bringing down both personal and corporate tax rates to 25 percent over a three-year period, seen at simplifying the tax brackets for individual taxpayers.
Dominguez earlier said revenues generated from the fuel excise tax adjustments would be redirected to those who need financial aid the most through targeted subsidies such as cash transfers and increased spending on social protection programs.
Ridon, meanwhile, said among the interesting bills included as priority measures was the proposal of the Department of Agriculture to ensure free irrigation for farmers in the countryside.
“Despite objections by several quarters, this is an important socioeconomic intervention by government to induce greater agricultural production and income for our farmers,” he added.