President Duterte concurs with DOF, will not suspend fuel excise tax

The fuel excise tax will not be suspended in the face of nonstop price hikes over the last three months. That is the stand of the Executive Branch of the government after President Duterte’s statement yesterday.

“The Cabinet members aren't there for nothing. Sila ‘yung magtrabaho at ako (They will do the work, and I), I will just decide after reading the reports, then I decide. That’s what I’m here for to talk to the nation. So sige, ‘yun ang policy ng executive department (so yes, that would be the executive department’s policy),” said President Duterte about the recommendation of the Department of Finance (DOF) to not suspend the excise tax.

A day after DOF Undersecretary Paola Alvarez spoke about huge revenue losses if a fuel excise tax moratorium were to be approved, Secretary Carlos Dominguez III also said it would cause the government to lose a staggering Php 1.76 trillion for 10 years. That is roughly one-half of one percent of our gross domestic product and would result in more loans for the Philippines.

The Finance Secretary also believes the move would not be beneficial to all Filipinos.

“The bottom 50 percent of the Philippines, they only consume 13 percent of the fuel. So, cutting the tax will benefit more the people who have cars and the other richer people. We will not be benefitting so much the bottom 50 percent of our population, that will make it very inequitable,” said Dominguez.

To help people affected by the high cost of fuel, the DOF is proposing a Php 200 per month subsidy for each of the 12 million poor Filipinos for one year.

“Retain the fuel excise taxes imposed under TRAIN (Tax Reform for Acceleration and Inclusion) Law [and] provide targeted subsidies to the lowest 50 percent of the households in the Philippines, totaling around 12 million people. This will cost PHP33.1 [billion] per — for the first year,” added Dominguez.

The DOF call this proposal “sustainable” and “something we can afford as of this time.” Do you agree? 

But here are bigger questions. Will the PHP 200 monthly subsidy be enough? Who will be qualified to get this subsidy?