The Department of Finance (DOF) has thumbed down the idea of suspending the excise tax on fuel amidst the uncontrollable rise in the cost of gasoline, diesel, and even kerosene.

DOF Undersecretary Paola Alvarez spoke to the media yesterday and stated that suspending the excise tax on fuel is not in the country’s best interest and will not help Filipinos in the lower-income brackets adversely affected by the continuous rise in fuel prices.

A study by the DOF shows that 48.8% of the country’s fuel consumption is made by the higher socioeconomic classes, while only 13.8% is used by the disadvantaged segment of society. According to the DOF, if the fuel excise tax is lifted, it will only benefit affluent and well-to-do families. People living at or below the poverty line will be impacted negatively as the government will lose income to fund social services programs for the poor.

"Pag overall sinuspinde po natin lahat – iyong excise tax including iyong VAT (value added tax) on excise tax ng lahat ng klase po ng fuel – mawawalan po tayo ng PHP 138.8 billion in one year or 0.6% of our GDP (gross domestic product). Ang pinu-propose po natin, imbes po na suspendehin natin overall, magbigay po tayo ng targeted support doon sa mga mahihirap na nangangailangan," said DOF Undersecretary Alvarez.

[If we suspend all the taxes including VAT on all fuel products we will lose PHP138.8 billion in one year or 0.6% of our GDP. What we are proposing is to extend targeted support to the poor who needs it instead of totally suspending the excise tax].

There are currently two separate bills in Congress aimed at the temporary suspension of excise tax on fuel to abate relentless increase in fuel prices and provide relief for all Filipinos still reeling from its effects.

House Bill 10488 stipulates a moratorium on fuel excise tax from June 2022 to November 2022; Senate Bill 2445 has from June 2022 to December 2022. The DOF computes the losses from the House bill at Php 48.7 billion, while the Senate version will cost the government Php 69.3 billion. DOF Undersecretary Alvarez added that if the fuel excise tax is suspended every time fuel prices go up, the country’s coffers will be lighter by Php 1.5 trillion by 2032.

The DOF is proposing a subsidy, instead of excise tax hiatus, targeting poor people who need it the most. “Ang pinu-propose po natin, imbes po na suspendehin natin overall, magbigay po tayo ng targeted support doon sa mga mahihirap na nangangailangan. (What we are proposing is to extend a targeted support to the poor who needs it instead of totally suspending the excise tax),” suggested DOF Undersecretary Alvarez.

Under this scheme, public utility drivers will receive aid through the Pantawid Pasada Program, and the government will continue to get revenue for programs and services for the people.