The Finance Department on Friday said the government will collect over P800 billion in additional revenues if fuel taxes are adjusted under a proposed reform package.
Finance Undersecretary Karl Kendrick Chua said in a recent hearing at the House of Representatives’ Ways and Means Committee the proposed adjustments to the oil excise tax aimed to stop subsidies on the fuel consumption of rich households and channel instead the savings to the government’s ambitious infrastructure program that would create more jobs, boost productivity and sustain high growth.
Chua said adjusting fuel excise taxes and indexing these to inflation from are expected to raise incremental revenues of P807.4 billion over the medium term. About P36.1 billion are expected to be collected in the second half of 2017, P120.9 billion in 2018, P147.2 billion in 2019, P156.9 billion in 2020, P167.6 billion in 2021 and P178.7 billion in 2022.
He said the additional collections assumed that both the House and the Senate would act soon on the first package of the Comprehensive Tax Reform Program contained in House Bill No. 4774 filed last week by House ways and means panel head Rep. Dakila Carlo Cua.
“This is a highly progressive tax because we would be removing subsidies on the fuel consumption of the top 10 percent of households with monthly incomes of around P115,000 and above who consume almost 51 percent of fuel in the country,” Chua told lawmakers at this week’s resumption of the House Ways and Means Committee hearings on HB 4774.
Chua also cited that the top one percent of households, with monthly income of around P293,000 each, accounted for around 13 percent of the fuel consumption in the country.
He said rather than indirectly subsidizing the rich, the additional revenues to be collected from the fuel excise increase would be better spent on targeted transfer programs for about 10 million poor and vulnerable households affected by the tax hike and earmarked for infrastructure projects to reduce traffic congestion and pollution and raise workers’ productivity.
“Lower-income households will see a minimal increase in excise tax payments compared to richer households. In particular, the lowest 10 percent of households will see a P160 increase in excise tax payments per year, while the richest 10 percent will see a P4,316 increase annually. This is an indicator of a highly progressive tax,” Chua said.